Kazi v. Rosen & Assocs.
Filed 12/2/13 Kazi v. Rosen & Assocs. CA2/7
California Rules of Court, rule 8.1115(a), prohibits courts
and parties from citing or relying on opinions not certified for publication or
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publication or ordered published for purposes of rule 8.1115
IN
THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND
APPELLATE DISTRICT
DIVISION
SEVEN
ZUBAIR KAZI et al.,
Plaintiffs and Appellants,
v.
ROSEN & ASSOCIATES, et al.,
Defendants and Respondents.
B241539
(Los Angeles
County
Super. Ct.
No. BC471055)
APPEAL
from orders of the Superior Court
of
County, Ronald M. Sohigian, Judge. Affirmed.
Baker
Marquart, Ryan G. Baker, Jaime W. Marquart and Kevin R. Boyle for Plaintiffs
and Appellants.
Nemecek
& Cole, Jonathan B. Cole, Mark Schaeffer and Lucy H. Mekhael for Defendants
and Respondents Rosen & Associates, Robert C. Rosen and John B. Wallace.
Rosen
& Associates, Robert C. Rosen, John B. Wallace and David Paul Bleistein for
Defendants and Respondents Penny McCoy and Chandrashekhar Joshi.
________________________________
INTRODUCTION
In the original federal action, two
corporate shareholders, represented by counsel, filed a complaint against the
corporation and related entities, asserting numerous causes of action,
including claims for alleged violations of the Racketeer Influenced and Corrupt
Organizations Act (RICO). (18 U.S.C. §
1961 et seq.) The district court
ultimately entered judgment as a matter of law against the shareholders and in
favor of the corporate entities on the RICO claims; because the RICO claims
were the sole basis for federal jurisdiction (and the district court found the
corporate defendants had elected not to challenge these claims for their own
strategic purposes as they wished to proceed in federal court), the district
court declined to exercise supplemental jurisdiction over the multiple
remaining claims, and the action was transferred to state court.
With the corporate shareholders’
remaining state claims still pending, the corporate entities then filed an
action for malicious prosecution and
abuse of process against the two corporate shareholders and their counsel,
based on the RICO claims.
The corporate shareholders and their
counsel, in turn, filed a special motion to strike the complaint for malicious
prosecution and abuse of process pursuant to Code of Civil Procedure section
425.16. Over the corporate entities’
opposition, the trial court granted the special
The corporate entities appeal. Because the corporate entities failed to
satisfy their burden to demonstrate a probability of prevailing on their claims
for malicious prosecution and abuse of process, we affirm.
FACTUAL
AND PROCEDURAL SUMMARY
In October 2011, Zubair Kazi, Kazi
Foods, Inc. and Kazi Management VI, LLC (Kazi unless otherwise noted) filed a
complaint for (1) malicious prosecution and (2) abuse of process against Penny
McCoy and Chandrasekhar Joshi as well as their attorneys Rosen &
Associates, P.C. (Rosen), Robert C. Rosen and John B. Wallace.
According to Kazi’s complaint, in
October 2008, on behalf of McCoy, Rosen filed a verified complaint against Kazi
in federal court, asserting causes of action including “purported RICO
[claims].†The complaint was amended
three times but always included the RICO claims—claims with no basis or
merit. Although the litigation lasted
nearly two years and trial lasted almost a month, Kazi alleged, McCoy and Rosen
made no effort to pursue their RICO claims and refused to dismiss them; they
never attempted to obtain evidence relating to their RICO claims and never
attempted to provide such evidence at trial.
Therefore, Kazi alleged, when trial concluded, the district court
granted Kazi’s motion for judgment as a matter of law on the RICO claims and
entered a verdict against McCoy and Rosen in Kazi’s favor, stating on the
record that the RICO claims were baseless and without merit.
In other words, Kazi alleged, McCoy
and Rosen “[lacked] probable cause to seek the RICO claims†and “possessed
malice when they filed and refused to dismiss their RICO claims.†“Indeed, [they] used the litigation process
and RICO claims to perpetuate an injustice, obtain a collateral and/or illegal
objective, harass, annoy, intimidate and/or threaten [Kazi] and to cause [him]
to incur legal fees and costs and to cause [him] exceptional difficulty in
defending [himself] in the federal case to coerce inequitable settlements and results . . . .â€
McCoy
and Rosen answered and filed special motions to strike pursuant to Code of
Civil Procedure section 425.16.
name="_ftnref2" title="">[2] (All further statutory references are to the
Code of Civil Procedure.) In their
special motions to strike (discussing RICO case law and supported by
describing attorney John Wallace’s investigation and evidence obtained), McCoy
and Rosen argued Kazi could not establish a probability of prevailing on their
malicious prosecution claim because Kazi could not establish as a matter of law
that McCoy and Rosen lacked probable cause to bring and maintain their RICO
claims against Kazi and Kazi’s abuse of process claim was barred by the
litigation privilege of Civil Code section 47, subdivision (b) (among other
grounds).
Kazi filed opposition, supported by
the declaration of Kazi’s attorney (Alexander Gareeb), in which Gareeb asserted
McCoy and Rosen failed to conduct discovery; when he sought an explanation,
“the attorneys†told him they could not provide a basis and would need an
expert; on June 22, 2010, the district court prohibited McCoy from presenting
its designated expert (Professor G. Robert Blakey) for failure to attach his
expert report; attorney Wallace acknowledged RICO claims were “tough to
maintain†but the goal was to “get treble damageâ€; the district court
“mention[ed]†the RICO claims as tenuous at best; Rosen’s opening statement
concerning the RICO claims was “very brief, conclusoryâ€; Rosen did not
acknowledge an agreement with Kazi’s counsel to dismiss the RICO claims; Kazi
was forced to file a motion for judgment as a matter of law; and at the
September 8, 2010, hearing on that motion, Rosen tried to dismiss its RICO
claims but the district court would not allow a voluntary dismissal at that
point and instead granted the motion, stating in its order the claims “had no
merit.â€
McCoy and Rosen filed objections to
several paragraphs of Gareeb’s declaration and filed a reply. The trial court sustained a number of these
objections. In addition, the trial court
took judicial notice of documents filed in federal court but did not accept
findings in that case for their truth.
The trial court granted both motions
to strike Kazi’s complaint.
Kazi appeals.
425.16.
Section 425.16, subdivision (b)(1),
provides as follows: “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 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.â€
“Resolution of an anti-SLAPP motion ‘requires
the court to engage in a two-step process. First, the court decides whether the defendant
has made a threshold showing that the challenged cause of action is one arising
from protected activity. The moving
defendant’s burden is to demonstrate that the act or acts of which the
plaintiff complains were taken “in furtherance of the [defendant]’s right of
petition or free speech under the United States or California Constitution in
connection with a public issue,†as defined in the statute. (§ 425.16, subd. (b)(1).) If the court finds such a showing has been
made, it then determines whether the plaintiff has demonstrated a probability
of prevailing on the claim.’†(
31 Cal.4th 728, 733 (Jarrow), quoting
Equilon Enterprises v. Consumer Cause,
Inc. (2002) 29 Cal.4th 53, 67.)
A. The “[A]rising
from†Prong.
The
“plain language of the ‘arising from’ prong encompasses any action based on
protected speech or petitioning activity as defined in the statute.†(Jarrow,
supra, 31 Cal.4th at p. 734, citation omitted.) “By definition, a malicious prosecution suit
alleges that the defendant committed a tort by filing a lawsuit.†(Id.
at p. 735, citation omitted.)
Accordingly, malicious prosecution actions fall within the purview of
the anti-SLAPP statute. (
earlier lawsuit are subject to an anti-SLAPP motion. (Rusheen
v. Cohen (2006) 37 Cal.4th 1048, 1063 [motion properly granted because
execution levy was protected under litigation privilege]; and see Weil &
Brown, Cal. Prac. Guide: Civil Procedure
Before Trial (The Rutter Group 2013) ¶ 7:642, p. 7(II)-17.)
B.
Prong
After determining that a challenged
cause of action arises from protected petitioning activity, a court ruling on
an anti-SLAPP motion then “‘determines whether the plaintiff has demonstrated a
probability of prevailing on the claim.’â€
(Jarrow, supra, 31 Cal.4th at
p. 741, citation omitted; Navellier v.
Sletten (2002) 29 Cal.4th 82, 93 [to withstand a special motion to strike,
a plaintiff must demonstrate that the claims are legally sufficient];
989 [same].) Therefore, from the outset,
a malicious prosecution plaintiff must be prepared to show a probability of
prevailing—that is, the malicious prosecution plaintiff must demonstrate that
the earlier lawsuit was filed “maliciously†and “without probable cause.†(Jarrow,
supra, 31 Cal.4th at p. 740, fn. 8.)
The plaintiff must also present
competent admissible evidence sufficient to overcome any privilege or defense
to the claim asserted by the defendant.
(Flatley v. Mauro (2006) 39
Cal.4th 299, 323 [litigation privilege (Civ. Code, § 47, subd. (b))].) The plaintiff must show there is admissible
evidence that, if credited, would be sufficient to sustain a favorable
judgment, similar to but not identical to the burden in opposing a summary
judgment motion. (McGarry v. University of San Diego (2007) 154 Cal.App.4th 97, 108;
and see Weil & Brown, Cal. Prac. Guide: Civ. Proc. Before Trial,
7(II)-57.)
The court does not weigh credibility
or compare comparative strength of the evidence. The court considers defendant’s evidence only
to determine if it defeats plaintiff’s showing as a matter of law. (Soukup
v. Law Offices of Herbert Hafif (2006) 39 Cal.4th 260, 291;
Fitzgibbons (2006) 140 Cal.App.4th 515, 522; Overstock.com, Inc. v. Gradient Analytics, Inc. (2007) 151
Cal.App.4th 688, 699-700.) Declarations
not based on personal knowledge, or that contain hearsay or impermissible
opinions, or that are argumentative, speculative or conclusory, are insufficient
to show a “probability†that a plaintiff will prevail. (Gilbert
v. Sykes (2007) 147 Cal.App.4th 13, 26; Dwight
R. v. Christy B. (2013) 212 Cal.App.4th 697, 714.) While the existence of a court order may be
judicially noticed, the truth of the matters asserted in the order, including
the court’s factual findings, is not entitled to notice; thus, a plaintiff
cannot rely on facts stated in a court order to establish a probability of
prevailing. (See Steed v. Department of Consumer Affairs (2012) 204 Cal.App.4th 112,
121, 124.)
“In a malicious prosecution action, the legal aspect of probable cause
requires a determination whether the prior claim for relief was legally
tenable. (Sheldon Appel Co. v. Albert & Oliker [(1989)] 47 Cal.3d [863,]
885-886 [(Sheldon Appel)].) Consideration of
this question requires that the court take account of the evolutionary
potential of legal principles and any uncertainty which might be embedded
there. (Ibid.) ‘To hold that the
person initiating civil proceedings is liable unless the claim proves to be
valid, would throw an undesirable burden upon those who by advancing claims not
heretofore recognized nevertheless aid in making the law consistent with
changing conditions and changing opinions. There are many instances in which a line of
authority has been modified or rejected. To subject those who challenge this authority
to liability for wrongful use of civil proceedings might prove a deterrent to
the overturning of archaic decisions.’†(
novel or debatable legal claims the California Supreme Court has adopted, with
appropriate modifications, the standard for determining whether an appeal is frivolous
(In re Marriage of Flaherty [(1982)] 31
Cal.3d [637,] 650), as the standard for determining probable cause in a
malicious prosecution action. (
885-886.) Under this standard a claim is
not lacking in probable cause if any reasonable attorney would have thought the
claim tenable.†(Leonardini, supra, 216
Cal.App.3d at p. 568 citing Sheldon
Appel, supra, 47 Cal.3d at pp. 885-886.)
A malicious prosecution plaintiff
cannot establish lack of probable cause based on having obtained, as defendant
in an earlier action, a defense summary judgment based on insufficiency of the
evidence. “[S]uccessfully defending a
lawsuit does not establish that the suit was brought without probable cause.†(Jarrow,
supra, 31 Cal.4th at p. 743.) “A
litigant will lack 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.†(
In evaluating the issue of probable cause, “a court must properly
take into account the evolutionary potential of legal principles.†(Sheldon
Appel, supra, 47 Cal.3d at p.
886.) Expert testimony is inadmissible;
objective tenability of the prior action is a question of law to be determined
by the court so it is error to admit such evidence. (Id.
at p. 884 [“experts may not give opinions on matters which are essentially
within the province of the court to decideâ€].)
The elements of a RICO claim are:
(1) conduct (2) of an enterprise engaged in or affecting interstate commerce
(3) through a pattern (4) of racketeering activity (5) that causes injury to
the business or property of the plaintiff.
U.S.C. §§ 1962, 1964, subd. (c); see Sedima,
S.P.R.L. v. Imrex Co., Inc. (1985) 473 U.S. 479, 496.) McCoy and Rosen presented extensive evidence
supporting the objective tenability of the RICO claim, and the trial court’s
exclusion of expert testimony through the grant of Kazi’s motion in limine does
not establish the absence of probable cause as a matter of law. Yet, Kazi made no effort whatsoever to
address the facts or legal theory underlying McCoy’s RICO claims or to
establish that, as an objective matter, no reasonable attorney would have
thought the claims tenable. (
properly granted the motions to strike as to the malicious prosecution cause of
action. If there are facts to
conclusively establish a reasonable basis for suit, the existence of other
disputed facts is irrelevant. (
Cal.App.4th 151, 167.) Weaknesses in the
evidence do not result in a lawsuit completely and totally devoid of
merit. (Jarrow, supra, 31 Cal.4th at p. 742.)
In Sheldon Appel, supra, 47 Cal.3d 863, the Supreme Court rejected the
objective/subjective approach to a probable cause determination. Probable cause is to be determined in all
instances by an objective standard, that is, whether the prior action was
objectively reasonable. If it was
objectively reasonable then the defendant is entitled to judgment in the
malicious prosecution action regardless of what his subjective belief or intent
may have been. (Id. at pp. 878-879.) The
purported evidence set forth in Gareeb’s declaration is more properly
characterized as potential evidence relating to the element of malice, but not
to the objective standard applicable to the probable cause element.
Similarly, as to Kazi’s abuse of
process claim, after the trial court properly excluded statements made “on
information and belief†in Gareeb’s declaration, Kazi was left with no evidence
whatsoever in support of the abuse of process claim. Declarations “on information and belief†are
hearsay and hence insufficient to show a “probability†that the plaintiff will
prevail. (Evans v. Unkow (1995) 38 Cal.App.4th 1490, 1497.) Kazi’s assertion that no more is required at
this “pleading stage†ignores the law applicable to special motions to strike;
to the contrary, only evidence
admissible
at trial may be considered. (
Accordingly, the orders are properly
affirmed.
DISPOSITION
The orders are affirmed. McCoy and Rosen (all respondents) are to
recover their costs as well as their attorney fees pursuant to Code of Civil
Procedure section 425.16, subdivision (c)(1).
We concur:
PERLUSS, P. J. ZELON,
J.
otherwise indicated; we include the individual attorneys (Rosen and Wallace) in
our references to Rosen unless otherwise indicated.
and abuse of process causes of action satisfy the “first prong†of section
425.16 (requiring McCoy and Rosen to demonstrate that Kazi’s claims are subject
to section 425.16), we focus our attention on the “second prong†which requires
Kazi to establish a probability of prevailing on its claims as we will further
discuss.
