Martin Cadillac Co. v. Pierson

Filed 7/31/07 Martin Cadillac Co. v. Pierson CA2/1

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION ONE

APPEAL from a judgment of the Superior Court of Los Angeles County, Michael L. Stern, Judge. Affirmed.

Law Offices of Beck & Browning, Robert W. Beck and Nicholas Browning III for Plaintiff and Appellant.

Nemecek & Cole, Jonathan B. Cole, Lucy H. Mekhael and Mark Schaeffer for Defendants and Respondents.

____________________

INTRODUCTION

Plaintiff Martin Cadillac Company, Inc. (Martin) appeals from a judgment entered as the result of the trial court granting a special motion to strike brought by defendants John K. Pierson, Leonard B. Ference, Pierson Law Firm, APLC (collectively Pierson) and Cyrus Maloo (Maloo) under Code of Civil Procedure section 425.16, Californias anti-SLAPP[1](Strategic Lawsuit Against Public Participation) statute,[2]in response to Martins lawsuit against Pierson for malicious prosecution of an underlying personal injury action arising out of a vehicle accident.[3] We affirm.

FACTUAL AND PROCEDURAL BACKGROUND

On Sunday, December 1, 2002, 86-year-old Stanley Dearborn (Dearborn), with his wife as a passenger, was driving a Cadillac Deville rented from and owned by Enterprise LSC Co. (Enterprise). Dearborns car collided with a Corvette driven by Walter Knuth (Knuth) and carrying Maloo as a passenger. The Dearborns were killed and Maloo suffered severe and permanent brain damage.

As attorney for Maloo, Pierson filed a personal injury complaint on June 19, 2003, alleging general negligence and other causes of action for damages against the Dearborns, their estates and executors, Knuth and Enterprise (the underlying action).

From information Martin provided in discovery, Pierson determined that Dearborn had been employed by Martin for 17 years. As a condition of employment, Martin received copies of Dearborns DMV records every six months. Martin required its employees to drive Cadillacs and, if they were going to rent a car, to rent it from the Enterprise office located at Martins facility. Martin paid for the rental of the Cadillac that Dearborn was driving at the time of the accident. On January 29, 2003, shortly after the accident, Martin issued a check to Enterprise in the amount of $42,393.40 for Enterprise Rent A Car number 478.

Martin also produced a Concession Agreement between Martin and Enterprise. The agreement required that Martin fulfill all its rental car requirements through Enterprise. Martin provided other documents showing Martins prior knowledge of Dearborns five accidents and one traffic violation for failing to stop at an intersection during the ten years prior to the accident. A personnel action request provided by Martin indicated that, in February prior to the December 2002 accident, Dearborn had made an unauthorized left-hand turn off Martins property into the street while driving a Martin-owned Cadillac and was warned that another such violation would result in disciplinary action up to dismissal.

On November 13, 2003, Pierson added Martin to the complaint as a defendant and thereafter served Martin, thereby making it a party to the action. Pierson alleged a cause of action for negligent entrustment. Martin answered on January 23, 2004.

On March 4, 2004, Martin filed and served a motion for sanctions, including dismissal, pursuant to section 128.7. The basis of the motion was that Maloos complaint lacked merit and evidentiary support as to the claims against Martin. When Maloo and Pierson failed to oppose the motion or to appear at the hearing, the trial court granted Martins sanctions motion and dismissed Martin from the action.

Subsequently, Pierson and Maloo sought reconsideration of the sanctions motion and relief from the dismissal pursuant to section 473 on the basis that Pierson was never provided with a date and time for hearing on the motion and therefore did not have an opportunity to oppose it. On September 17, 2004, the trial court granted reconsideration and vacated its earlier order dismissing Martin.

After reconsideration, on September 23, 2004, the trial court denied Martins motion for sanctions, including dismissal. The previously set trial date was continued.

Seven days later, Martin filed a motion for summary judgment. In the course of the summary judgment proceedings, the court granted Martins request first to file a supplemental brief, a supplemental statement of undisputed facts and eight declarations. In its supplemental submissions filed in December 2004, Martin included the time card reports that Martin failed to produce pursuant to a deposition subpoena which Pierson had served months earlier. In rendering its decision at the hearing on December 16, 2004, the trial court stated that since Martin had not previously made the relevant time records available to Pierson, the court was compelled to deny the summary judgment motion because Dearborns employment status was a triable issue.

Martin promptly filed a motion to bifurcate the trial on December 20, 2004. Then on the date of the hearing, January 21, 2005, Martin served a supplemental brief on the issue of the existence and scope of Martins duty with respect to Maloo. The trial court granted the motion to bifurcate and ruled that the first issue to be decided was Maloos allegation regarding the course and scope of Dearborns employment. In proceedings held on January 27, 2005, the day trial was to begin, the trial court granted the motion to bifurcate and stated: If the case gets tried at all, effectively we will have two issues. One, whether or not Mr. Dearborn was acting within the course and scope of his employment; and number two, what, if any, was the duty that was on the part of Martin Cadillac.

The issue of duty was briefed. On February 22, 2005, the trial court issued a notice of ruling that, as a matter of law, there was no duty imposed on Martin with respect to the alleged negligence of Mr. Dearborn, assuming that he was not acting in the course and scope of his employment. The ruling effectively removed the potential for Martin to be held liable to Maloo for negligence.

By the ruling, the trial court narrowed the possibility for Maloo to recover to only one theory of liability, a respondeat superior theory, and at that time, Maloo was seriously ill. Pierson decided not to go to trial, and tried to work out a walk-away settlement with Martins attorney. Martins attorney first agreed to a settlement including a release of Maloo and Pierson from claims by Martin provided that Martin confirmed agreement to the court in a conference call. Although there was an indication that Martin orally agreed by telephone, Martin never signed a written agreement to that affect. Pierson requested the trial court to enforce the agreement pursuant to section 664.6, but on July 7, 2005, the court denied the request. Finally, Pierson simply filed a dismissal without prejudice on August 16, 2005 and the court entered it on the same date.

Martin filed a complaint for malicious prosecution against Pierson and Maloo on September 15, 2005. Pierson then filed the instant anti-SLAPP motion to have Martins complaint stricken.

The trial court granted the anti-SLAPP motion on February 8, 2006. The courts minute order stated that the court found that Martin cannot show that the underlying action was brought without probable cause and also cannot show malice, as required to establish a cause of action for malicious prosecution. On February 28, 2006, judgment was entered in favor of Pierson, and Pierson was awarded attorneys fees and costs.

DISCUSSION

Section 425.16, subdivision (b)(1), provides that [a] cause of action against a person arising from any act of that person in furtherance of the persons right of petition or free speech under the United States or California Constitution in connection with a public issue shall be subject to a special motion to strike, unless the court determines that the plaintiff has established that there is a probability that the plaintiff will prevail on the claim. In determining whether an anti-SLAPP motion should be granted, the court engages in a two-step process. (City of Cotati v. Cashman (2002) 29 Cal.4th 69, 76; Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 67.) First, it determines whether the defendant has made a threshold showing that the challenged cause of action is one arising from protected activity. (City of Cotati, supra, at p. 76; Drum v. Bleau, Fox & Associates (2003) 107 Cal.App.4th 1009, 1018, disapproved on another ground in Rusheen v. Cohen (2006) 37 Cal.4th 1048, 1065.) If so, then it must determine whether plaintiff has shown a probability of prevailing on its claim. (City of Cotati, supra, at p. 76; Drum, supra, at p. 1018.)

The term probability is synonymous with reasonable probability. [Citation.] Put another way, the anti-SLAPP statute require[s a plaintiff] to make a prima facie showing of facts which would, if proved at trial, support a judgment in plaintiffs favor. [Citations.] (Schoendorf v. U.D. Registry, Inc. (2002) 97 Cal.App.4th 227, 238.)

We review a judgment resulting from an order granting a special motion to strike de novo. (Slaney v. Ranger Ins. Co. (2004) 115 Cal.App.4th 306, 318; Scott v. Metabolife Internat., Inc., supra, 115 Cal.App.4th at p. 413.) That is, we independently determine whether the opposing partys cause of action against the moving party arises from the moving partys exercise of a valid right of free speech or petition and if so, whether the opposing party has established a probability of prevailing on the cause of action. (Governor Gray Davis Com. v. American Taxpayers Alliance (2002) 102 Cal.App.4th 449, 456; see also Premier Medical Management Systems, Inc. v. California Ins. Guarantee Assn. (2006) 136 Cal.App.4th 464, 479.)

With regard to evaluating evidence related to the special motion to strike and its opposition, [t]he court considers the pleadings and evidence submitted by both sides, but does not weigh credibility or compare the weight of the evidence. Rather, the courts responsibility is to accept as true the evidence favorable to the [opposing party] [citation] and evaluate the [moving partys] evidence only to determine if it has defeated that submitted by the [opposing party] as a matter of law. [Citations.] The trial court merely determines whether a prima facie showing has been made that would warrant the claim going forward. [Citation.] [Citation.] (Blanchard v. DIRECTV, Inc. (2004) 123 Cal.App.4th 903, 918, italics omitted.)

Martin concedes the first step has been established. ( 425.16, subd. (b)(1).) Piersons activities in filing and maintaining the underlying action constitute activities protected by the anti-SLAPP statute. A claim for malicious prosecution arises from a persons constitutionally-protected right to petition. (Jarrow Formulas, Inc. v. LaMarche (2003) 31 Cal.4th 728, 739.)

The only issue on appeal is whether Martin has defeated the anti-SLAPP motion by showing the probability that it will prevail on its malicious prosecution claim against Pierson, as required under the second step. ( 425.16, subd. (b)(1).) Martin was required to make a prima facie showing of facts based on admissible evidence that would, if proved, support a judgment in Martins favor. (Mann v. Quality Old Time Service, Inc. (2004) 120 Cal.App.4th 90, 105.) That is, Martin had to show a reasonable probability of prevailing as to each element of a malicious prosecution cause of action. ( 425.16, subd. (b).)

In order to prevail on a malicious prosecution claim, a plaintiff must prove that the defendant brought the underlying lawsuit without probable cause and with malice, and that the termination of the suit was favorable to the plaintiff. (Crowley v. Katleman (1994) 8 Cal.4th 666, 676; Sheldon Appel Co. v. Albert & Oliker (1989) 47 Cal.3d 863, 871-872.) In other words, the commission of the tort of malicious prosecution requires a showing of an unsuccessful prosecution of a criminal or civil action, which any reasonable attorney would regard as totally and completely without merit (Sheldon Appel, supra, 47 Cal.3d at p. 885), for the intentionally wrongful purpose of injuring another person. (Downey Venture v. LMI Ins. Co. (1998) 66 Cal.App.4th 478, 499.) Malicious prosecution also includes continuing to prosecute a lawsuit after discovering the suit lacks probable cause. (Zamos v. Stroud (2004) 32 Cal.4th 958, 973.)

Martin contends that it has made the required showing of a probability of prevailing on its claim. First, Martin asserts that Pierson had no probable cause to initiate and maintain the underlying action. Secondly, Pierson acted with the requisite malice, in that Pierson maintained the underlying action for an improper purpose, that is, to force Martin to pay a settlement, knowing probable cause was lacking. Lastly, the dismissal without prejudice entered at Piersons request constituted a termination of the underlying action favorable to Martin.

As to establishing a lack of probable cause to litigate a claim, the California Supreme Court stated that [o]nly those actions that any reasonable attorney would agree [are] totally and completely without merit may form the basis for a malicious prosecution suit. (Wilson v. Parker, Covert & Chidester (2002) 28 Cal.4th 811, 817.) As explained in Roberts v. Sentry Life Insurance (1999) 76 Cal.App.4th 375 as follows: A plaintiff has probable cause to bring a civil suit if his claim is legally tenable. This question is addressed objectively, without regard to the mental state of plaintiff or his attorney. [Citation.] The court determines as a question of law whether there was probable cause to bring the maliciously prosecuted suit. [Citation.] Probable cause is present unless any reasonable attorney would agree that the action is totally and completely without merit. [Citation.] This permissive standard for bringing suits, and corresponding high threshold for malicious prosecution claims, assures that litigants with potentially valid claims wont be deterred by threat of liability for malicious prosecution. [Citation.] [] Probable cause may be present even where a suit lacks merit. Favorable termination of the suit often establishes lack of merit, yet the plaintiff in a malicious prosecution action must separately show lack of probable cause. Reasonable lawyers can differ, some seeing as meritless suits which others believe have merit, and some seeing as totally and completely without merit suits which others see as only marginally meritless. Suits which all reasonable lawyers agree totally lack meritthat is, those which lack probable causeare the least meritorious of all meritless suits. Only this subgroup of meritless suits present no probable cause. [Citation.] (Id. at p. 382.)

Pierson claims that the trial courts denial of Martins motion for summary judgment in the underlying action is sufficient to show probable cause to bring and maintain the action, based upon the Roberts rule. (Roberts v. Sentry Life Insurance, supra, 76 Cal.App.4th at p. 384.) The court in Roberts concluded that normally the trial courts denial of a defendants summary judgment motion shows that the plaintiff had probable cause to initiate the lawsuit. (Ibid.) The court explained that [b]ecause denial of summary judgment is a sound indicator of probable cause, it is sensible to accept it as establishing probable cause defeating a later malicious prosecution suit. Doing so serves the policy expressed in Sheldon Appel [Co. v. Albert & Oliker, supra, 47 Cal.3d 863] to discourage dubious malicious prosecution suits. (Roberts, supra, at p. 384.)

Martin points out, however, that Roberts expressed that the rule would normally be the case, but also recognized there may be exceptions, such as when the summary judgment motion was granted based upon materially false facts. (Roberts v. Sentry Life Insurance, supra, 76 Cal.App.4th at p. 384.) Martin claims that, in the instant case, the trial courts denial of its summary judgment motion was analogous to a denial based on materially false evidence, and therefore, constitutes an exception to the general rule articulated in Roberts.

More specifically, Martin contends that the trial court ignored the lack of any facts supporting Piersons allegation that Dearborn was acting in the course and scope of his employment. Martin asserts that the trial court misconstrued the respective burdens of proof of each party in a summary judgment proceeding as set forth in Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826 at pages 850-851 (Aguilar), and thus, erroneously applied the burden of proof to Martin, and not Pierson, in reaching the courts decision to deny Martins summary judgment motion. We do not agree with Martins interpretation and application of the Aguilar principles to the instant case.

The courts opinion in Aguilar provides that the burden of proof required to show no triable issue of material fact exists rests with the moving party. (Aguilar, supra, 25 Cal.4th at p. 843.) More specifically, from commencement to conclusion, the party moving for summary judgment bears the burden of persuasion that there is no triable issue of material fact and that he is entitled to judgment as a matter of law. (Id. at p. 850.) Thus, the moving party must persuade the court that there is no material fact for a reasonable trier of fact to find. (Id. at p. 850 at fn. 11.)

In the summary judgment proceeding at issue, Martin was the moving party, that is, the party which had the burden of proof. In ruling on the [summary judgment] motion, the court must consider all of the evidence and all of the inferences reasonably drawn therefrom [citation], and must view such evidence [citations] and such inferences [citations], in the light most favorable to the opposing party. (Aguilar, supra, 25 Cal.4th at p. 843.)

Review of the record indicates that it is reasonable to infer that the summary judgment court found that when Martins evidence was viewed in the light most favorable to Maloo, the evidence failed to show that no triable issue of fact remained. (Aguilar, supra, 25 Cal.4th at p. 843.) In the instant case, Martin gave the trial court multiple opportunities to determine whether Piersons claims lacked merit, and in each instance the trial court found that triable issues remained. First, Martin brought a motion for sanctions, including dismissal, alleging that Maloos claims lacked merit. Promptly after the trial court denied the sanctions motion, Martin moved for summary judgment. After acceding to three requests by Martin to submit supplemental briefing and/or evidence after preliminary indications from the trial court that summary judgment would be denied, the trial court found that Martin still was unable to show that no triable issues remained. At the final hearing on the summary judgment motion, the trial court acknowledged that it was not until Martin provided supplemental evidence in support of its summary judgment motion that Martin finally produced employee time cards which Pierson had requested in discovery months previously. The trial court noted several factors indicating that a triable issue on Piersons respondeat superior theory remainedthe late date of Martins production of the time cards, the entries on some of the cards which showed that occasionally Martins employees recorded their time as beginning on one date and ending on the next date, Piersons lack of opportunity to take depositions regarding such entries in order to discover facts which would support a finding that Dearborn was acting in the course and scope of employment at the time of the accident, and the fact that Martin claimed it could not produce the time cards for the days in November prior to the December 1 accident. The trial court denied Martins summary judgment motion.

Martin emphasizes that, even if arguably Pierson had probable cause to initiate the underlying action, at various points during the proceedings Pierson no longer had probable cause, but continued prosecuting the action any way. Martin identifies one point as being when the trial court granted Maloo relief from the initial order dismissing Martin from the action, in that the trial court had already granted Enterprises summary judgment motion, finding that as a matter of law, no joint venture existed between Enterprise and Martin. The joint venture ruling does not support Martins contention, however, in that it only affected one of Piersons three theories of liability against Martin, and two of Piersons causes of actionnegligence and respondeat superiorwere unaffected. These two causes of action were, in fact, the subject of the summary judgment motion which Martin filed months later.

As to the two causes of action, Martin advances essentially the same arguments it previously asserted in support of its motion for summary judgment. On this appeal, however, we are not reviewing the trial courts denial of summary judgment. We are determining whether the denial constitutes a sufficient showing that Piersons theories lacked probable cause, given that probable cause is lacking only in the totalabsence of merit. (Roberts v. Sentry Life Insurance, supra, 76 Cal.App.4th 375, 383.)

The threshold for establishing lack of probable cause to bring an underlying lawsuit is high. (Roberts v. Sentry Life Insurance, supra, 76 Cal.App.4th at p. 382.) We cannot conclude that Martin met this threshold showing. Rather, Pierson made a sufficient showing of probable cause to preclude a determination that there was a reasonable probability that Martin would prevail on its malicious prosecution claim. Therefore, the trial court properly granted Piersons anti-SLAPP motion.

Martin additionally contends that it has also shown a probability of prevailing as to the malice required to establish liability for malicious prosecution. Martin asserts that its showing that Pierson lacked probable cause also supports an inference of malice. While lack of probable cause may also be used in conjunction with other factors to show malice (Jacques Interiors v. Petrak (1987) 188 Cal.App.3d 1363, 1371), Martin was unsuccessful in establishing the lack of probable cause. Hence, no inference of malice arises.

Martin also argues that Pierson maintained the underlying action against Martin for an improper purpose, that is, to force a monetary settlement, as shown by the facts that Pierson made several settlement demands to Martin and although it was repeatedly indicated that Maloos medical expenses alone exceeded $1 million, Pierson demanded only a paltry $50,000.00. Malice exists when an action is instituted or maintained for an improper purpose, such as to force a monetary settlement which has no relation to the merits of the claim. (HMS Capital, Inc. v. Lawyers Title Co. (2004) 118 Cal.App.4th 204, 218.) Martin further contends that malice can be inferred from Piersons failure to prepare for trial (Downey Venture v. LMI Ins. Co., supra, 66 Cal.App.4th 478, 498) and proceeding instead to dismiss the action without prejudice. We disagree.

Pierson counters that its reasons for dismissing the action rather than going to trial were totally unrelated to any such improper purpose. When the trial court narrowed the possible theories of liability to one theory, then Pierson determined it would not be economically feasible to proceed to trial based on only the one theory remaining. Piersons client, Maloo, was seriously ill and did not want to incur the expense of trial solely on the one issue, and consented to a mutual walk away to conclude the action.

The record supports Piersons explanation for the dismissal as being reasonable. It indicates that Martin, not Pierson, initiated events that prolonged the litigation after Martins motion for summary judgment was denied. As the result of bifurcation proceedings Martin had initiated and caused to be continued, the trial court did not rule that Martin had no duty to Maloo, thereby effectively eliminating trial on Piersons negligence cause of action, until the hearing held on the date set for trial. At that time, Piersons respondeat superior theory remained viable. When Pierson determined, under the circumstances then existing, not to continue the underlying action, Pierson proposed a settlement in which Martin and Pierson would release all claims against each other, no money would be paid, and the suit would be dismissed. Martins attorney led Pierson to believe that Martin would agree to it. Only after it became clear that Martin did not intend ever to sign any settlement agreement, did Pierson file the dismissal without prejudice as to Martin.

As the court in Oprian v. Goldrich, Kest & Associates (1990) 220 Cal.App.3d 337, expressed, [i]t would be a sad day indeed if a litigant and his or her attorney could not dismiss an action to avoid further fees and costs, simply because they were fearful such a dismissal would result in a malicious prosecution action. It is common knowledge that costs of litigation, such as attorneys fees, costs of expert witnesses, and other expenses, have become staggering. The law favors the resolution of disputes. This policy would be ill-served by a rule which would virtually compel the plaintiff to continue his litigation in order to place himself in the best posture for defense of a malicious prosecution action. [Citation.] (Id. at pp. 344-345.) We conclude that Martin failed to show that Pierson had initiated and maintained the underlying action for an improper purpose (ibid.) and consequently, failed to show a probability of prevailing as to the malice element of its malicious prosecution claim based upon such a theory (HMS Capital, Inc. v. Lawyers Title Company, supra, 118 Cal.App.4th at p. 218).

In summary, we conclude that Martin failed to show a reasonable probability of being able to prove at least two of the elements of a cause of action for malicious prosecutionlack of probable cause and malice (Zamos v. Stroud, supra, 32 Cal.4th at p. 973; Crowley v. Katleman, supra, 8 Cal.4th at p. 676; Sheldon Appel Co. v. Albert & Oliker, supra, 47 Cal.3d at pp. 871-872)[4]and, therefore, has not shown a reasonable probability of prevailing on its claim against Pierson (Schoendorf v. U.D. Registry, Inc., supra, 97 Cal.App.4th at p. 238). Pursuant to section 425.16, in the absence of such a showing, Piersons anti-SLAPP motion properly was granted. ( 425.16, subd. (b)(1).)

The judgment is affirmed. The Pierson defendants are awarded their costs on appeal, including attorneys fees in an amount to be determined by the trial court on remand.

NOT TO BE PUBLISHED

JACKSON, J.*

We concur:

VOGEL, Acting P. J.

ROTHSCHILD, J.

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[1] See Scott v. Metabolife Internat., Inc. (2004) 115 Cal.App.4th 404, 407 at footnote 1.

[2] Subsequent statutory references are to the Code of Civil Procedure unless otherwise stated. The motion brought under section 425.16 at issue herein is sometimes referred to as the anti-SLAPP motion.

[3] In the underlying personal injury lawsuit, Martin was the defendant and Maloo was the plaintiff, represented by Pierson. In the instant malicious prosecution lawsuit, Martin is the plaintiff and Pierson is the defendant. Although Maloo is named as a defendant also, Martin did not serve Maloo after learning that Maloo had filed for bankruptcy. To avoid confusion, we will use the name indicated for each party.

[4] We therefore need not address the question whether the dismissal of the underlying action without prejudice constituted a termination favorable to Martin.

* Judge of the Los Angeles Superior Court assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.