Opinion
A147793
05-25-2017
MICHAEL PURTILL et al., Plaintiffs and Respondents, v. PATRICIA WEITL, as Trustee, etc., Defendant and Appellant.
ORDER MODIFYING OPINION AND DENYING REHEARING; NO CHANGE IN JUDGMENT THE COURT: It is ordered that the opinion filed herein on May 25, 2017, be modified as follows: The final two sentences of the penultimate paragraph, on page 20, are deleted and replaced with the following:
"The schedules reflected assets of $3,355,057, primarily real property, and liabilities of $1,884,757, and the record indicates without contradiction that at the time of trial Pippo remained the owner of this substantial acreage. There is no evidence that Pippo's financial condition changed materially after the schedules were prepared."The petition for rehearing is denied. There is no change in the judgment. Date:
/s/_________ Acting P.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NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Solano County Super. Ct. No. FCS035322)
Defendant Patricia Weitl, as trustee for the Donald Pippo revocable trust, appeals a judgment entered in favor of plaintiffs Michael and Annie Purtill and Timothy and Elaine Snow on their complaint for, among other things, slander of title, malicious prosecution and conversion. On appeal, defendant contends there is insufficient evidence to support the judgment on plaintiffs' malicious prosecution and slander of title claims. Defendant argues further the punitive damages awarded are either unsupported by substantial evidence or excessive. We agree with defendant that there is no substantial evidence to support the award of emotional distress damages to Timothy Snow and Elaine Snow on their claims for malicious prosecution so that that element of the judgment must be stricken, but we reject the remainder of defendant's claims.
Background
Plaintiffs' Claims
Plaintiffs' first amended complaint, filed in August 2011, alleges numerous causes of action, all of which stem from plaintiffs' purchase in 2004 of real property from Donald Pippo. Plaintiffs' claim for slander of title alleges that beginning in April 2007 and continuing through February 2009, Pippo falsely claimed an ownership interest in a portion of property that he had sold to plaintiffs. The unfounded claim allegedly clouded plaintiffs' title and prevented them from selling the property. During that time period, Pippo filed an action to recover his alleged interest in their property, and filed a notice of lis pending against the property. Pippo's action, which was dismissed with prejudice in March 2009, forms the basis of plaintiffs' malicious prosecution claim. Plaintiffs' conversion and unjust enrichment claims are based on Pippo's retention of a $50,000 check that was proffered in connection with a proposed agreement to settle the controversy that Pippo rejected.
Pippo died after entry of judgment in this case but before the filing of the notice of appeal. Patricia Weitl has prosecuted the appeal as trustee of the Donald Pippo revocable trust.
Plaintiffs complaint also alleged causes of action for fraud and breach of contract. These claims were dismissed prior to trial and are not at issue on appeal.
The Relevant Parcels
In 2002, Pippo subdivided a 134-acre property in Solano County into seven lots. Lot 3, the primary lot at issue, was 32.19 gross acres at the time of the subdivision. Due to a road easement, the net acres available for development on lot 3 in 2002 was 27.88 acres. Lot 3 is zoned for agricultural use with one building entitlement. When the purchase agreement in question was being negotiated, the parties understood that a change in zoning to R2.5 or R5 would likely be approved by the county, allowing for single family uses of 2.5-acre or 5-acre lots.
Lot 3 is adjacent to lots 5 and 7. At the time, the boundary between lots 3, 5 and 7 ran along the middle of a creek. The north east corner of lot 7 includes an unusual "arrowhead" shaped area that is approximately two acres. The arrowhead abuts lot 3 on its eastern boundary.
The parties refer to this approximately two acre portion of lot 7 interchangeably as the "arrowhead" and the "knoll."
The 2004 Purchase Agreement and 2006 Addendum
In late 2003 and early 2004, Pippo negotiated an agreement with Purtill under which Pippo would sell lot 3 to plaintiffs. A March 2004 document outlines their "points of agreement." The document indicates that the purchase price was to be $1.5 million, payable in installments over a period of approximately 18 months. The parcel was to be split into 13 lots, at Purtill's expense, and Pippo would release the lots on a percentage paid basis. Paragraph 6 states, "One-half acre lot line adjustment to be added to current parcel - agreement to specify half acre location (east corner of south creek)."
On April 2, 2004, Pippo, Purtill and Snow executed a formal agreement for the sale of the property (2004 agreement). The agreement describes the property as "parcel '3' of Pippo subdivision approximately 32.5 acres." Addendum A to the agreement restates the terms of the "points of agreement" with one significant modification: Paragraph 6 was altered by handwritten deletions and interlineations, initialed by the parties, to read, "lot line adjustment to be added to current parcel-agreement to include N/E corner of lot 7 (exhibit 'A')." Exhibit A is a map on which the arrowhead is highlighted in yellow.
In February 2006, Pippo, Purtill and Snow executed an addendum to the purchase agreement (2006 addendum). Under the 2006 addendum, Pippo agreed "to release the current parcel of approximately 28 acres (Lot 3, Pippo Ranch) for $150,000.00." The addendum states further that Snow and Purtill "continue to have the right to purchase the other 4+ acres as agreed in the original purchase agreement (total of 32.5 acres and 13 NRWD water connections). The necessary lot line adjustment to achieve 32.5 acres is currently in process . . . . The amount outstanding to purchase the additional 4+ acres is $409,000 as per the original agreement. . . . [¶] If Michael Purtill and Tim Snow fail to pay off the balance of $409,000 plus interest, Don Pippo retains the additional 4+ acres in the lot line adjustment which include the 2-acre knoll east of the creek. The practical outcome of this would be that Don Pippo receives two lots in a 13-lot subdivision on the 32.5 acres (13/2.5-acre average parcel size)." A "proposed new map" attached to the addendum shows the configuration of lot 3 with the lot lines adjusted to include the two-acre "knoll" or "arrowhead" on the east side of the creek.
The lot line adjustment anticipated by the 2006 addendum was never approved. Instead, in January 2007, the county approved a lot line adjustment that reduced the size of lot 3 to 26.79 net acres.
Trial Testimony
Prior to entry of the 2004 agreement, Purtill and Pippo walked the property. Purtill testified that he agreed to pay the $1.5 million asking price if certain "additional acreage" was included in the sale. He explained that the additional property included the 2-plus-acre arrowhead area and another approximately 1.5 acres that would result from adjusting the lot line from the middle of the creek to just south of the creek. He calculated that the four-plus acres of the additional property added to the 27.88 net acres already existing in lot 3 would total 32.5 acres.
Pippo disputed Purtill's testimony. He claimed that the $1.5 million purchase price did not include any property other than the 32 gross acres in lot 3. With respect to the highlighted area on exhibit A to the 2004 agreement, Pippo testified that it merely represented a proposed lot line adjustment to which he was not opposed. He explained that he could not "make an agreement to do a lot line adjustment because that would be an action of the County." He agreed that if the lot line adjustment had gone through, Purtill would not have owed him any additional money because the adjustment would be done "with a give-and-take. For instance, if he wanted to pick up that arrowhead piece, there might be a concession on the lot line adjustment for me to give up or gain on his side of the creek."
In May 2005, Pippo sold to Joel Danforth lot 5 and lot 7 which, as indicated above, included the arrowhead acreage. Pursuant to their agreement, Pippo excluded from the purchase approximately 10 acres located in the northern portions of lots 5 and 7, where the lots abut the boundary of lot 3 in the creek. The lot line adjustment referenced in paragraph 6 of the 2004 agreement is not mentioned in the agreement for the sale of lot 7. Pippo testified that he told Danforth that Purtill was interested in the arrowhead property and asked Danforth to work with Purtill "to fulfill his wishes" but that, ultimately, it would be up to Danforth to decide whether to transfer that property to Purtill and Snow.
Purtill testified that he proposed the 2006 addendum to remove Pippo's deed of trust on lot 3 in order to obtain a construction loan and begin development. By that time, plaintiffs had made consistent payments of principal and interest according to the payment schedule contained in the 2004 agreement, reducing the outstanding principal to approximately $560,000. According to Purtill, he made the $150,000 payment in exchange for the release of title to lot 3. Because they were still waiting for the lot line adjustment to be approved, he agreed to make the final $409,000 payment once the additional property was added to lot 3. According to Purtill, under the terms of the 2006 addendum he owned lot 3 outright once the $150,000 payment was made.
Pippo disputed Purtill's understanding of the 2006 addendum. Pippo testified that the four acres referenced in the addendum were not the additional property contemplated in the lot line adjustment, but rather four unidentified acres already a part of lot 3. He explained that lot 3 was 32.5 gross acres and claimed that he only intended to transfer 28 acres to Purtill.
In April 2007, Pippo demanded payment under the 2006 addendum. At trial, Purtill claimed that he informed Pippo that in light of the county's refusal to approve the lot line adjustment, plaintiffs were no longer obligated to pay the $409,000 balance under the 2006 addendum because they had not acquired the additional acreage that would have resulted from the adjustment. Pippo denied ever being told that by Purtill. He testified that Purtill told him he had no money to make the payment and he assumed Purtill knew that the balance was owed for the purchase of lot 3 and not for the purchase of the additional acreage.
In August 2008, Purtill and Danforth agreed to a proposal designed to eliminate any controversy with Pippo. At that point, Danford held title to lot 7, in which the arrowhead acreage was located, but subject to Pippo's reservation of approximately 10 acres. Purtill believed he had paid Pippo the full amount that he owed Pippo for the purchase of lot 3 without the additional acreage that he had not acquired, but he was prepared to pay Pippo an additional $50,000 to settle the matter. Purtill and Danforth proposed an agreement under which Danforth would agree to re-purchase the arrowhead property (already included in lot 7) from Pippo "for the amount of $505,270.59 that Michael Purtill and partners owe Donald Pippo for [the arrowhead property]" and Pippo would release Purtill and his partners from all liability under the 2006 addendum. Purtill agreed to pay $50,000 towards Danforth's purchase price, and Danford was confident that he would be able to work out a satisfactory arrangement with Pippo for the balance. Purtill and Danforth signed a proposed agreement with these terms and Danforth submitted the agreement to Pippo for his signature along with Purtill's $50,000 check. Pippo refused to sign the agreement but retained the $50,000 in satisfaction of a debt he claimed Danforth owed him.
In September 2008, shortly after the purchase agreement was rejected, Danforth wrote to Pippo expressing confusion regarding the land dispute between Purtill and Pippo. In this letter Danforth writes, "Being that you will not accept my assumption of [Purtill's] loan, the $50,000.00 payment will be applied to the $15,600.00 and the balance towards the balance and straight note. . . . I understand your principle with [Purtill] in part. However, the land that you are in dispute with [Purtill] about is already in our map. Based on what I read in the documents, you can only get the lot back that we already have back in our map? Is that right?"
At the same time, Pippo's attorney was communicating with Purtill's attorney in an attempt to resolve the dispute. A letter dated November 4, 2008 reflects that Pippo's attorney was operating under the incorrect understanding that the proposed lot line adjustment had been approved by the county and that the additional property had been incorporated into lot 3 but that Purtill had neither paid for the additional property nor returned the two lots to Pippo as required by the 2006 addendum. The letter states, "I have also enclosed a post-lot line adjustment assessor's map on the area (exhibit B) so that we can be clear about the properties involved in the dispute. Mr. Purtill has acquired parcel 3 of the Pippo Ranch subdivision, as shown on the assessor's map. . . . [¶] The addendum to purchase agreement, which you and I discussed in our September telephone conversation, calls for Mr. Pippo to 'retain[s] the additional four plus acres in the lot line-adjustment, which includes the two-acre knoll east of the creek. . . .' As I indicated to you in our telephone conversation, Mr. Pippo contends that Mr. Purtill did not create the 'additional four plus acres' as required by the addendum. . . . Accordingly, when Mr. Purtill failed to pay off the $409,000 plus interest balance as required by the addendum . . . , Mr. Pippo was left with neither the money he was owed nor the Lot he was owed under the Addendum." The assessor's map attached as exhibit B to the letter is not an accurate post-lot line adjustment map, but rather the proposed map that was attached as an exhibit to the 2004 purchase agreement depicting the lot line on the assumption that the adjustment would be approved.
At trial, Purtill testified that he tried to explain to Pippo's attorney that the map was incorrect and that the lot line adjustment had not been approved, but the attorney insisted that he had a "litigation guarantee" showing the contrary.
In December 2008, Pippo filed a complaint against plaintiffs for specific performance, quiet title, and breach of contract for failing to pay the remaining balance owed for the purchase of lot 3. According to the complaint, Purtill and his partners were required under the 2004 purchase agreement and the 2006 addendum "to process a lot line adjustment, in part to create a separate four plus (4+) acre parcel to be deeded to Pippo (the 'Pippo Lot')." The complaint alleged further that in February 2006 in reliance on the 2006 addendum Pippo "executed a full deed of trust reconveyance to the entire parcel No. 3 . . . , including that portion (the 'Pippo Lot') that is to be conveyed to [Pippo] by [Purtill]." The complaint sought, among other things, an order requiring Purtill to pay the outstanding balance on the purchase agreement or quieting title in the "Pippo Lot" in favor of Pippo and requiring Purtill to execute a quitclaim deed transferring the "Pippo Lot" to Pippo. A notice of lis pendens was filed in the recorder's office. On March 9, 2009, the complaint was dismissed with prejudice.
At trial, Pippo testified that the allegations of his complaint, as drafted by his attorney, did not "make any sense" and that he did not understand them. He also could not recall having any conversation with his attorney regarding why the lawsuit should be dismissed. He believed the lawsuit was dismissed without asking him. His attorney testified, however, that he spoke with Pippo prior to filing the dismissal and Pippo wanted to dismiss the case because they believed Purtill was judgment proof and Pippo did not want to be deposed.
The Statement of Decision and Judgment
On October 13, 2015, the trial court issued an extensive tentative statement of decision, which was later adopted by the court as its statement of decision. The trial court found in plaintiffs' favor on their claim for slander of title and found that the damages caused by Pippo's slander of title were $400,000. The court also awarded punitive damages on the slander of title claim in the amount of $25,000.
The court also found in plaintiffs' favor on their malicious prosecution claim and found that the damages "appear[ed] to be approximately at least $100,000." The court noted, however, that the amount "is significant only if the court determines that plaintiffs' slander of title claim fails . . . ." The court also found that plaintiffs Annie Purtill, Timothy Snow and Elaine Snow were entitled to an award of damages for emotional distress "in the amount of $20,000" and that Purtill was entitled to an award for emotional distress in the amount of $100,000. Finally, the court awarded punitive damages on the malicious prosecution claim in the amount of $100,000.
The court had previously granted plaintiffs' motion for summary adjudication of the conversion and unjust enrichment claims, finding that plaintiffs were entitled to damages in the amount of $50,000. In its statement of decision, the court found further that plaintiffs were entitled to punitive damages in the amount of $100,000 on their conversion claim.
A judgment awarding plaintiffs a total of $845,835.57 was entered on November 18, 2015. Defendant timely filed a notice of appeal following the denial of Pippo's motion for new trial.
The judgment awards $100,000 in compensatory damages for malicious prosecution to be recovered "concurrently with" $400,000 in compensatory damages awarded for slander of title, i.e., not in addition to the $400,000. The judgment also awards $50,000 for unjust enrichment to be recovered "concurrently with" $50,000 plus $35,835.57 in interest for conversion. Although not expressly stated in the judgment, based on the total amount of the judgment it appears that the $25,000 punitive damages that the court found plaintiffs entitled to recover for slander of title were deemed duplicative of, or awarded "concurrently with," the $100,000 in punitive damages awarded for malicious prosecution.
Discussion
1. Contract Interpretation
The trial court found that in entering the 2004 agreement "the parties intended to include the 'arrowhead' in the purchase price of $1,500,000 and the purchase agreement should be so construed." Defendant contends the court violated "basic contract interpretation principles" in so finding. We disagree.
Defendant contends the court erred in excluding Pippo's testimony regarding the meaning of paragraph 6 of the 2004 agreement, which addresses the inclusion of the additional property through the proposed lot line adjustment. As set forth above, Pippo was allowed to testify fully as to his understanding of the meaning of the relevant documents. The trial court, however, refused to consider his testimony in interpreting paragraph 6 because it varied the express terms of the written agreement. We need not decide whether the court's application of the parol evidence rule was correct because the court also found Pippo's testimony that paragraph 6 merely reflected his lack of opposition to such a lot line adjustment "internally inconsistent" and "inherently unbelievable." Any purported error in refusing to consider Pippo's testimony was undoubtedly harmless.
Pippo also contends the court erred by interpreting the agreements "against Pippo because there is insufficient evidence he drafted any agreements between the parties other than to alter paragraph six of the 2004 agreement." The court did not construe the agreements against Pippo. Rather, the court rejected Pippo's argument that any ambiguity in paragraph 6 should be construed against Purtill. The court did so on the ground that "it was Mr. Pippo who prepared [the outline] and Mr. Pippo who altered that paragraph in [the purchase agreement]." Even assuming that the evidence is inconclusive regarding who prepared the initial outline, defendant concedes that it was Pippo who altered paragraph 6 in the final agreement. Thus, the court properly refused to construe that provision against plaintiffs.
More importantly, it was not necessary to rely on presumptions to resolve the ambiguity in paragraph 6. It is undisputed that at the time of the purchase, lot 3 had 32.19 gross acres and 27.88 net acres. The trial court reasoned that without inclusion of the four-plus acres of additional property, lot 3 could only be subdivided into eleven 2.5-acre parcels which would be inconsistent with the provision in the 2004 agreement that anticipates division into thirteen 2.5-acre parcels. As the court explained, "The reality is that lot 3 as it existed both before and after the lot line adjustment could at most be subdivided into 11 lots. Lot 3 could only be subdivided into 13 2½ lots if the 4+ acres had been added to it as contemplated by the 2004 agreement and the 2006 addendum. If it had, and Messrs. Purtill and Snow failed to pay, Mr. Pippo would have been entitled to two of the 13 lots. That lot line adjustment did not occur, as a result of which the arrowhead remained in lot 7 and became lot 23 of the planned Tierra del Sol subdivision. In addition, the [property] of lot 7 which Mr. Pippo had 'reserved' increased to over 10 acres, allowing the subdivision of that portion into four parcels rather than three. Thus actual lot line adjustment resulted in the ability of Pippo and Danforth to create two more 2½ acre lots than they would have been able to create if the contemplated lot line adjustment had taken place."
Defendant disputes this reasoning, arguing "Pippo testified that lot 3 at the time of sale consisted of 32.19 acres without any reduction by roadway easements. He also testified that the intent of paragraph six of the 2004 agreement as originally drafted was to give Purtill an additional half acre to bring the total acreage up to 32.5 acres so that Purtill could get thirteen 2.5-acre lots." Defendant, however, does not dispute the court's finding that the property with only 27.88 net acres could not under applicable zoning have been subdivided into 13 parcels. It is entirely possible that Pippo initially believed that an additional half acre would be all that was required to allow for subdivision of lot 3 into 13 parcels, but that is not what paragraph 6 of the agreement provides for. The court reasonably concluded that between the drafting of the agreement and the time it was signed, the parties' understanding changed to conform with the zoning requirements and that is why paragraph 6 was altered to provide for the inclusion of additional property.
Accordingly, we find no error in the court's finding that the 2004 agreement includes the additional property in the purchase price of $1.5 million.
2. Slander of Title
" 'Slander of title is effected by one who without privilege publishes untrue and disparaging statements with respect to the property of another under such circumstance[s] as would lead a reasonable person to foresee that a prospective purchaser or lessee thereof might abandon his intentions. [Citation.] It is an invasion of the interest in the vendibility of property. In order to commit the tort actual malice or ill will is unnecessary. [Citations] Damages usually consist of loss of a prospective purchaser. [Citation.] To be disparaging a statement need not be a complete denial of title in others, but may be any unfounded claim of an interest in the property which throws doubt upon its ownership. [Citation.]' [Citation.] 'However, it is not necessary to show that a particular pending deal was hampered or prevented, since recovery may be had for the depreciation in the market value of the property.' " (M.F. Farming, Co. v. Couch Distributing Co., Inc. (2012) 207 Cal.App.4th 180, 198-199, disapproved on different ground Baral v. Schnitt (2016) 1 Cal.5th 376, 396, fn. 11.)
The court found that Pippo made numerous untrue statements to Danforth between May or June of 2007 and March 2009 that plaintiffs "received property in the lot line adjustment which they had not paid for." The court found further that Pippo made these statements with reckless disregard for the truth and that plaintiffs suffered pecuniary loss as a result of Pippo's statements.
On appeal, defendant contends there is no substantial evidence to support the finding that Pippo claimed that plaintiffs owed him money for property transferred in the lot line adjustment. Defendant relies on Pippo's testimony at trial that Purtill owed him for four unidentified acres that were included in lot 3 prior to any lot line adjustment. As noted, however, the trial court found Pippo's testimony completely lacking in credibility. The court cited the November 2008 letter from Pippo's attorney and Danforth's September 2008 letter as evidence that at that time Pippo claimed, falsely and contrary to his trial testimony, that he was owed for the additional property supposedly added to lot 3 in the lot line adjustment. More conclusively, in Pippo's verified answer to plaintiffs' cause of action for slander of title, Pippo "avers that he had conveyed the additional property to plaintiffs; plaintiffs were in default under the agreement because they had not paid the purchase price for the additional property; and defendant intended to sue in foreclosure, as was his right to do so." The "additional property" is defined in the complaint to include the "NE corner of lot 7." The evidence unquestionably supports the trial court's finding that Pippo made false statements regarding his interest in Purtill's property.
Defendant argues further that Pippo's statements were privileged under Civil Code section 47, subdivision (c) and that plaintiffs did not present sufficient evidence of malice to overcome his privilege. "Civil Code section 47, subdivision (c) codifies the common law privilege of common interest, 'which protected communications made in good faith on a subject in which the speaker and hearer shared an interest or duty. This privilege applied to a narrow range of private interests. The interest protected was private or pecuniary; the relationship between the parties was close, e.g., a family, business, or organizational interest; and the request for information must have been in the course of the relationship.' " (Kashian v. Harriman (2002) 98 Cal.App.4th 892, 914.) "The common interest privilege is usually described as a qualified or conditional one, meaning it can be overcome by a showing of malice." (Ibid.) " 'The malice necessary to defeat a qualified privilege is "actual malice" which is established by a showing that the publication was motivated by hatred or ill will towards the plaintiff or by a showing that the defendant lacked reasonable grounds for belief in the truth of the publication and therefore acted in reckless disregard of the plaintiff's rights.' " (Sanborn v. Chronicle Publishing Co. (1976) 18 Cal.3d 406, 413.)
Here, the trial court concluded that Pippo lacked reasonable grounds to believe his statements were true and thus acted with reckless disregard for plaintiffs' rights. Substantial evidence supports the court's finding. The lot line adjustment processed in January 2007, which reduced rather than enlarged the gross acreage of lot 3, is a public record. Purtill testified that when Pippo demanded payment in April 2007, he told him the lot line adjustment had not been approved. The trial court found Purtill's testimony credible and, considering that the matter could have been resolved by easy reference to public documents, Pippo's failure to do so was reckless. Moreover, the letters written in September and November 2008 clearly put Pippo and his attorney on notice that there was a misunderstanding as to the lot line adjustment. Nonetheless, Pippo pursued his claim by filing an action that placed a cloud on plaintiffs' title to the property they had purchased and paid for. This evidence amply demonstrates malice.
Finally, defendant argues that there is insufficient evidence of pecuniary loss. At trial, an experienced commercial mortgage broker testified that Pippo's claim effectively prevented Purtill from refinancing the property and a local real estate broker testified that he would not have undertaken to list the property until the cloud on the title was resolved. Purtill testified that in April 2007, the market value of the property was approximately $1.3 million. Plaintiffs' expert valued the property in March 2009, when Pippo's lawsuit was dismissed, at $837,000. Pippo conceded in his 2008 complaint that plaintiffs were actively marketing lot 3 for sale. Evidence was also introduced that in November 2007 Purtill received an offer to purchase the property for $1.2 million, but that he did not respond or counter the offer because he knew that the sale would not go through because of the cloud on his title. Contrary to defendant's argument, this evidence is sufficient to support the court's finding that plaintiffs suffered $400,000 in damages as a result of the cloud that Pippo placed on their title.
3. Malicious Prosecution
To prevail on a malicious prosecution claim, a plaintiff must prove that a prior action, commenced by or at the defendant's direction, "(1) terminated favorably as to the plaintiff; (2) was brought without probable cause; and (3) was initiated with malice." (Sierra Club Foundation v. Graham (1999) 72 Cal.App.4th 1135, 1147.) The trial court found Pippo liable for malicious prosecution of the action he filed in December 2008 and awarded plaintiffs $100,000 in compensatory damages and $160,000 in emotional distress damages under this cause of action. Defendant challenges the court's findings with respect to each element of the cause of action.
Defendant contents Pippo's dismissal of the action in March 2009 was not a favorable termination. "A ' "favorable" termination does not occur merely because a party complained against has prevailed in an underlying action. While the fact he has prevailed is an ingredient of a favorable termination, such termination must further reflect on his innocence of the alleged wrongful conduct. If the termination does not relate to the merits—reflecting on neither innocence of nor responsibility for the alleged misconduct—the termination is not favorable in the sense it would support a subsequent action for malicious prosecution.' [Citation.] ' "[W]hen the underlying action is terminated in some manner other than by a judgment on the merits, the court examines the record 'to see if the disposition reflects the opinion of the court or the prosecuting party that the action would not succeed.' " [Citations.]' [Citation.] 'Should a conflict arise as to the circumstances of the termination, the determination of the reasons underlying the dismissal is a question of fact.' " (Sycamore Ridge Apartments LLC v. Naumann (2007) 157 Cal.App.4th 1385, 1399.) Generally, "A voluntary dismissal is presumed to be a favorable termination on the merits . . . . [Citations.] This is because ' "[a] dismissal for failure to prosecute . . . does reflect on the merits of the action [and in favor of the defendant] . . . . The reflection arises from the natural assumption that one does not simply abandon a meritorious action once instituted." ' " (Id. at p. 1400.)
Here, there is ample evidence that the December 2008 action was premised on the incorrect assertion that the lot line adjustment had increased the acreage in lot three and that plaintiffs had not paid the outstanding balance or returned the land to Pippo as required by the agreements. The action was dismissed while a demurrer and motion to strike were pending and shortly after it became clear that the lot line adjustment had not been approved. On February 18, 2009, Purtill's attorney wrote to Pippo's attorney explaining, "You advised that you had a 'litigation guarantee' . . . that confirmed your client had conveyed 'lot 23' (as referred to in exhibit C, paragraph 1, attached to your complaint) also referred to as 'the 2 acre knoll on the east side of the creek' (see Exhibit B to your complaint) to my client by a recorded grant deed, or at least that is the understanding I came away with from our conversation. I requested that you provide me with whatever written evidence you had of this in fact having occurred, and, if it has, our agreement to deed it back to your client immediately. [¶] If I am in error with regard to the above would you please advise me immediately in writing." The action was dismissed the following month. Accordingly, the dismissal reasonably reflects a determination that the action had no merit and thus would not be successful. Pippo's testimony that he did not know why the action was dismissed and his attorney's testimony that the action was dismissed because he believed plaintiffs were judgment proof was, as the court concluded, lacking in credibility.
The court's finding that Pippo lacked probable cause to bring the lawsuit is similarly supported by the record. A litigant lacks "probable cause for his actions if he relies upon facts which he has no reasonable cause to believe to be true, or seeks recovery upon a legal theory which is untenable under the facts known to him." (Leonardini v. Shell Oil Co. (1989) 216 Cal.App.3d 547, 568.) "[W]hen a party is put on notice a fundamental element of its case is disputed, it should not proceed without evidence sufficient to support a favorable judgment on that element or at least information affording an inference such evidence can be obtained." (Arcaro v. Silva & Silva Enterprises Corp. (1999) 77 Cal.App.4th 152, 158-159 [Defendant in malicious prosecution action lacked probable cause to sue plaintiff in prior collection action because it was put on notice that plaintiff's purported signature on credit application was a forgery.].) As discussed above, the evidence establishes that Pippo was repeatedly told that the lot line adjustment had been rejected but he nonetheless filed his lawsuit, apparently without attempting to confirm whether his understanding was correct. Under the circumstances, there was no objectively reasonable basis to have believed that his claim was viable.
Defendant argues that plaintiffs cannot establish a lack of probable cause because he relied on the advice of his attorney in filing the complaint. Reliance on the advice of counsel is a defense to malicious prosecution. (See Bertero v. National General Corp. (1974) 13 Cal.3d 43, 53-54.) However, this defense is not available "if the defendant knows . . . that [he] does not have probable cause to file suit. [Citation.] Good faith reliance is an obvious prerequisite." (George F. Hillenbrand, Inc. v. Insurance Co. of North America (2002) 104 Cal.App.4th 784, 814.) Thus, for example, if a defendant "withholds from counsel facts he knew or should have known would defeat a cause of action," he may not invoke the defense. (Bertero v. National General Corp., supra, at pp. 53-54.) A party relying on the defense has a "duty to find out all the pertinent facts known to his own agents and such facts as are readily ascertainable at the time, and to acquaint counsel with them. He may not plead advice of counsel as a defense where he failed to make a full and fair disclosure of all the pertinent facts which he knew or should have known with regard to the alleged malicious charge." (Jackson v. Beckham (1963) 217 Cal.App.2d 264, 272.) Because Pippo failed to disclose to his attorney the fact that the plaintiffs had not received the four-plus acres in the lot line adjustment, he cannot rely on the advice of counsel defense.
Defendant contends there is insufficient evidence of malice. "The 'malice' element . . . relates to the subjective intent or purpose with which the defendant acted in initiating the prior action." (Downey Venture v. LMI Ins. Co. (1998) 66 Cal.App.4th 478, 494.) "Malice may be inferred from circumstantial evidence, such as the defendants' lack of probable cause, supplemented with proof that the prior case was instituted largely for an improper purpose. [Citation.] This additional proof may consist of evidence that the prior case was knowingly brought without probable cause or was brought to force a settlement unrelated to its merits. [Citation.] A defendant attorney's investigation and research also may be relevant to whether the attorney acted with malice." (Cole v. Patricia A. Meyer & Associates APC (2012) 206 Cal.App.4th 1095, 1114; see also Downey Venture v. LMI Ins. Co., supra, 66 Cal.App.4th at p. 494 [Malice "may range anywhere from open hostility to indifference."].)
Here, evidence was presented that by the time the action was filed, Pippo bore considerable ill-will towards Purtill. The trial court found, based on Danforth's testimony, that Pippo told Danforth he was ready to "yank Mr. Purtill out of his house and beat the s*** out of him in the front yard," and that Pippo was "hostile" towards Purtill. This evidence, coupled with Pippo's disregard for the truth of the allegations, amply supports the malice finding.
Finally, the trial court awarded plaintiffs $100,000 in compensatory damages and $160,000 in emotional distress damages under the malicious prosecution cause of action. Defendant contends the compensatory damage award is contingent, duplicative and speculative and the emotional distress damages are not supported by substantial evidence.
The $100,000 compensatory damage award compensates plaintiffs for loss in value of the property for the period between the filing and dismissal of the complaint, during which period plaintiffs were unable to sell the property. As discussed above, the evidence amply supports the court's valuation of the decline in value during the relevant time period. While duplicative of the slander damages, under the judgment entered by the court, the malicious prosecution damages are expressly made "concurrent" with the $400,000 damages awarded on the slander of title claim, and thus not separately included in the $845,835.57 judgment.
The court found that Annie Purtill, Timothy Snow and Elaine Snow were each entitled to $20,000 in emotional distress damages and that Mr. Purtill was entitled to an award of $100,000 based on his testimony and that of his wife that the filing of the complaint devastated him and rendered him "nonfunctional" for a considerable period of time. Substantial evidence undoubtedly supports the award to Mr. Purtill. The fact that his depression began before the lawsuit was filed does not negate the substantial evidence that his condition worsened with the filing of the lawsuit and that his physical manifestations were more pronounced after the action was filed.
Substantial evidence also supports the $20,000 award to Mrs. Purtill. Ms. Purtill testified that with the filing of the lawsuit Mr. Purtill "withdrew emotionally and really didn't offer any emotional support for our family. With him not working also there wasn't any financial support." This evidence supports an inference that she suffered emotional distress as a result of Pippo's malicious prosecution of the lawsuit against her and her husband.
With respect to the emotional distress damages to the Snows, plaintiffs argue that the court was justified in awarding damages for emotional distress without any evidence of their emotional distress. Relying on Bertero v. National General Corp., supra, 13 Cal.3d 43, 61-62, plaintiffs argue the court reasonably could have inferred that the prosecution of the false claim caused them substantial emotional distress. In Bertero the court held that based on "substantial testimony as to the trauma suffered by [plaintiff] due to the filing of the cross-pleading which sought $104,000, the successful recovery of which might have made him insolvent . . . [t]he jurors could reasonably have inferred that the prosecution of the fabricated charges exposed [plaintiff] to damages to which he could not have responded and thereby served to bring about substantial emotional distress." (Ibid.) Plaintiffs cite to no evidence whatsoever on which a similar inference could be drawn in the present action. Accordingly, the $40,000 awarded the Snows must be stricken.
4. Punitive Damages
The trial court found plaintiffs entitled to a total $225,000 in punitive damages; $25,000 on the slander of title claim and $100,000 each on the claims for malicious prosecution and conversion. Defendant contends there is insufficient evidence of malice to support the punitive damage awards.
As noted above, however, it appears that the $25,000 awarded for slander of title was treated in the final judgment as duplicative of the $100,000 awarded for malicious prosecution and thus the total recoverable amount of punitive damages was only $200,000.
As discussed above, contrary to defendant's argument, there was substantial evidence that Pippo repeatedly asserted both to Danforth and through the filing of his complaint that plaintiffs had acquired land through the lot line adjustment that they had not paid for and that his assertions were made with reckless disregard for the truth and were motivated at least in part by ill-will towards Purtill. This evidence of malice is sufficient to support the punitive damages award on the slander and malicious prosecution claims.
With respect to the punitive damages awarded on the conversion claim, the trial court found that Pippo's retention of the $50,000 was "certain to vex, annoy and injure Mr. Purtill and was, at a minimum, done in reckless disregard of its possible results." Defendant argues that Pippo's actions "at worst, . . . amounted to a mistake in that he believed the $50,000 paid by Purtill was on behalf of Danforth, based on Danforth's subsequent letter directing Pippo how to apply the $50,000." The check, however, was signed by Purtill and drawn on his account and specifically references the purchase agreement that Pippo rejected. Pippo had no reasonable basis for keeping the funds. Given Pippo's expressed ill-will towards Purtill and his understanding that Purtill was "on suicide watch" the court reasonably inferred an intent to vex and injury by the retention of the deposit.
Finally, the punitive damage award is not excessive under either federal or state law. When faced with a challenge to the amount of a punitive damages award, an appellate court's function is to determine whether the award is "excessive as a matter of law or raises a presumption that it is the product of passion or prejudice. (Adams v. Murakami (1991) 54 Cal.3d 105, 109-110.) In reviewing whether an award is excessive, the court considers "(1) the reprehensibility of the acts of the defendant in light of the record as a whole; (2) the amount of compensatory damages awarded; and (3) the wealth of the particular defendant." (Boeken v. Philip Morris, Inc. (2005) 127 Cal.App.4th 1640, 1689; see also Cooper Industries, Inc. v. Leatherman Tool Group, Inc. (2001) 532 U.S. 424, 440 [In determining whether an award of punitive damages is excessive under federal law, courts similarly consider "(1) the degree or reprehensibility of the defendant's misconduct, (2) the disparity between the harm (or potential harm) suffered by the plaintiff and the punitive damages award, and (3) the difference between the punitive damages awarded by the jury and the civil penalties authorized or imposed in comparable cases."].)
Contrary to defendant's argument, Pippo's conduct was sufficiently reprehensible to support the award in this case. (Boeken v. Philip Morris Inc., supra, 127 Cal.App.4th 1640, 1688-90.) Indeed, the entire disagreement could have been avoided by simple investigation. The relationship between the total punitive damages and the actual harm inflicted as measured by the total compensatory damages is not unreasonable and is well within constitutional limits. Finally, plaintiffs presented sufficient evidence of Pippo's financial condition to support the award. Schedules listing all of Pippo's assets that Pippo had filed in July 2012 in support of a bankruptcy petition summarily dismissed by the bankruptcy court were properly admitted. The schedules reflected assets of $3,355,037, primarily real property, and liabilities of $1,884,757. Although compiled three years prior to trial, Pippo offered no evidence that his financial condition had changed materially since the schedules were prepared, which he was of course free to do.
Accordingly, there was no error in the punitive damage award.
Disposition
The award of emotion distress damages to Timothy Snow and Elaine Snow is stricken. The judgment is affirmed in all other respects. Plaintiffs shall recover their costs on appeal.
Pollak, Acting P.J. We concur: Siggins, J.
Jenkins, J.