v.
Joan BELL, and
[*63] To prevail in a malicious prosecution action under California law, a malicious prosecution plaintiff (the defendant in the underlying action)
[*64] must show that (1) the plaintiff in the underlying action pursued a claim with subjective malice, (2) the claim was brought without objective probable cause, and (3) the underlying action was terminated on the merits in favor of the defendant. The issue in this case is a seemingly simple one. The plaintiff in the underlying action brought multiple claims and lost many, perhaps most of them, but prevailed on at least one. Can the defendant bring a malicious prosecution action by showing that some of the claims were malicious and lacked probable cause, but without showing a "favorable termination" of the entire underlying action?
In many respects, the answer likewise appears simple. In its most recent discussion of the issue, the California Supreme Court emphasized that "lack of probable cause" and "favorable termination" were distinct requirements in a malicious prosecution action: " '[T]hat a malicious prosecution suit may be maintained where only one of several claims in the prior action lacked probable cause [citation] does not alter the rule there must first be a favorable termination of the entire action.' " ( Crowley v. Katleman (1994)
In this case, John and Denise Lane jointly owned a piece of rural property together with Denise's mother, Joan Bell. In 2011, the Lanes filed a lawsuit (the property action) against Bell arising out of disputes over the property. (See Lane v. Bell (Jan. 8, 2015, D064651)
What appears to be simple becomes more complicated because the Crowley discussion is technically dicta; in Crowley there was no question that the underlying action in its entirety had terminated favorably to the defendant. ( Crowley , supra , 8 Cal.4th at p. 676,
To do so, however, would require that we ignore two relatively recent decisions by this court that follow Crowley on this very point, albeit without recognizing the potential conflict with Albertson . More importantly, the rule urged by the Lanes would conflate two separate elements in a malicious prosecution claim, effectively eliminating any requirement that the entire underlying action terminate in the defendant's favor.
In the absence of further guidance from the Supreme Court, we believe Crowley correctly addresses the issue, and the trial court properly relied on Crowley in granting summary judgment. Accordingly, we affirm.
FACTUAL AND PROCEDURAL BACKGROUND
1. The Underlying Dispute and the Property Action
In 1987, John Lane acquired the property and ultimately conveyed an undivided one-half interest to Bell. Concurrently with that transfer, the Lanes and Bell entered into a Joint Venture Agreement (JVA) defining the parties' anticipated rights and responsibilities. Under the JVA, the parties would seek approval for a lot split which, if successful, would leave Bell with the upper lot and the Lanes with the lower lot. The Lanes were responsible for processing the lot split application, and the parties would equally divide the associated costs and common expenses for the land. The parties also agreed that if the lot split was denied, each would have a right of first refusal to purchase the other's interest in the land.
Bell moved onto the upper lot in 1989 and lived on the land in a recreational vehicle through 2010. Although they did everything required of them under the JVA, the Lanes were ultimately unable to accomplish a lot split because of intervening legislation. They also failed to obtain county approval for a "granny flat" for Bell-with a separate kitchen-attached to the vacation home they were preparing to build on the property.
Shortly thereafter, Bell sought the help of a friend, Jerry Michael Suppa, who was of counsel to a law firm that ultimately represented Bell in the property action. Suppa told John Lane that Bell was entitled to the house and [*66] wanted a quarter of a million dollars. He threatened Lane with elder abuse charges and financial ruin if he did not capitulate.
Meanwhile, based on a revised set of plans, the Lanes began construction of a home without a granny flat. By late October [*608] 2010, the residence had been sufficiently completed to permit the Lanes to obtain a certificate of occupancy. During this same period, the parties negotiated a buy-out agreement under which they would dissolve the JVA, hire an appraiser to value the land, and have the Lanes purchase Bell's interest. When negotiations on the buy-out stalled, the Lanes filed the property action against Bell. They alleged claims for breach of contract, negligent misrepresentation, breach of the promissory note, and three causes of action seeking to quiet their title as against Bell's claims. In response, Bell filed her cross-complaint, upon which the Lanes' current action for malicious prosecution is predicated, which alleged claims for breach of contract, violation of the implied covenant of good faith, elder abuse, fraud, intentional infliction of emotional distress, and declaratory relief/partition.
At trial in the property action, the claims raised by Bell's cross-complaint against the Lanes resulted in a judgment granting some of the relief sought by Bell. On Bell's claim for declaratory relief/partition, the court concluded that Bell and the Lanes each had an interest in the property; it valued Bell's gross share in the property at $177,500 and the Lanes' gross share at $382,500. Granting Bell's claim for partition, the court determined her net share[1] to be $44,787, and ordered that the Lanes had the right to acquire Bell's interest in the property upon payment to her of that amount. The Lanes prevailed on all of the remaining claims in Bell's cross-complaint, including her causes of action for elder abuse and intentional infliction of emotional distress.[2]
2. The Malicious Prosecution Action
Following judgment in the property action, the Lanes filed this action for malicious prosecution based on the portion of Bell's cross-complaint that asserted claims for elder abuse and intentional infliction of emotional distress. Bell initially defended by moving to strike the complaint pursuant to the [*67] anti-SLAPP (Strategic Lawsuit Against Public Participation) statute ( Code Civ. Proc., § 425.16 ), but the trial court denied the motion and this court in Lane I affirmed that order on appeal. Bell thereafter moved for summary judgment, asserting (among other things) that under the rationale of this court's decision in StaffPro, Inc. v. Elite Show Services, Inc. (2006)
The trial court granted Bell's motion for summary judgment. It noted that the judgment in the property action showed Bell prevailed on part of her cross-complaint (as well as on many claims interposed by the Lanes' complaint). Under StaffPro , Bell's partial success precluded the Lanes from establishing "favorable termination" of the underlying action.
DISCUSSION
A claim for malicious prosecution requires that the plaintiff demonstrate (1) the defendant brought (or continued to pursue) a claim in the underlying action without objective probable cause, (2) the claim was pursued by the defendant with subjective malice, and (3) the underlying action was ultimately resolved in the plaintiff's favor. ( Sycamore Ridge Apartments, LLC v. Naumann (2007)
[*68] A. Favorable Termination
"Favorable termination ... is an essential element of the tort of malicious prosecution, and it is strictly enforced." ( Ferreira v. Gray, Cary, Ware & Freidenrich (2001)
As previously noted, this issue is framed by two Supreme Court cases decided nearly 40 years apart- Crowley , supra ,
Decided 12 years after Murdock , Albertson 's discussion of the favorable termination requirement arose in an unusual context. The underlying action [*69] filed by Raboff against Albertson pleaded two claims. Raboff sought (1) a money judgment on a debt owed to him, and (2) a lien on real property allegedly pledged by the original debtor to secure the debt or, in the alternative, a declaration that the transfer of the property by the original debtor to Albertson was a transfer in fraud of creditors. Raboff filed a lis pendens in connection with the latter claims. Although Raboff prevailed on the first claim to collect on the debt, Albertson defeated the lien claim and subsequently sued Raboff alleging disparagement of title based on the recording of the lis pendens. ( Albertson , supra , 46 Cal.2d at pp. 377-378,
Before addressing those issues, the court first considered Raboff's argument that Albertson's malicious prosecution complaint was premature because, at the time it was filed, there was still an appeal pending from the underlying judgment. Albertson rejected that argument because the appeal challenged only the money judgment in favor of Raboff. "That part of the judgment was severable from the part that determined that [Raboff] had no interest in or right to a lien upon plaintiff's real property. No appeal was taken from the latter part of the judgment, and it became final. ... [Citations.] Plaintiff's complaint herein was filed after the time for appeal had expired and was therefore not premature." ( Albertson , supra , 46 Cal.2d at p. 378,
Having disposed of the preliminary matter, Albertson turned to the two principal questions in the case. As to the first, the court concluded that the pleaded claim (disparagement of title based on the lis pendens) was subject to the absolute privilege. The opinion then examined whether the complaint, although not stating a valid [*611] disparagement of title claim, might nonetheless adequately allege the elements of a malicious prosecution claim. Although the court's malicious prosecution discussion extensively examined the "probable cause" and "malice" elements, its sole evaluation of the "favorable termination" element was its peremptory statement that "[a ]s indicated above , that part of the judgment in the former action that determined that [Raboff] had no interest in or a right to a lien upon [Albertson's] real property is now final and constitutes a termination of that separable part of the proceeding favorable to [Albertson]." ( Albertson , supra , 46 Cal.2d at p. 382,
Roughly 20 years later, Albertson was relied on by the Supreme Court for its discussion of the probable cause requirement. In Bertero v. National General Corp. (1974)
The Supreme Court considered the favorable termination requirement again in Crowley , supra ,
Crowley addressed the distinct issue of whether, for purposes of determining the lack of probable cause element, each theory asserted in the underlying action must be separately supported by probable cause or whether the existence of probable cause for any of the underlying claims bars a later action for malicious prosecution. The underlying plaintiff (Katleman) filed a will contest against Crowley seeking to invalidate a will favoring him. Katleman's complaint alleged six different grounds (including undue influence by Crowley) to contest the will; the probate court ultimately rejected all six challenges. ( Crowley , supra , 8 Cal.4th at pp. 673-674,
In Crowley , the underlying plaintiff recovered nothing on any claim. Thus, the court was not directly presented with the issue of whether a partial recovery by the underlying plaintiff would be fatal to a showing of the favorable termination element in the subsequent malicious prosecution action. However, the Supreme Court's opinion is hardly silent on the issue. Katleman sought to rely on Freidberg , supra ,
The Supreme Court dismissed the argument that if some recovery in the underlying proceeding bars a later malicious prosecution action then some probable cause in the underlying proceeding (even without any recovery) should also bar a later malicious prosecution:
" Freidberg was not a probable cause case but a favorable termination case. Prior opinions have stressed that the two elements of the tort serve different purposes: '[Plaintiff] confuses the elements of probable cause and favorable termination. Whether a prior action was legally tenable goes to the issue of probable cause, that is, did the defendant have an honest and reasonable belief in the truth of the allegations. [Citation.] Whether a prior action was terminated favorably tends to show the innocence of the defendant in the prior action [citations], and is not affected by the objective tenability of the claim. In short, these two elements of the malicious prosecution tort serve different purposes, and the legal tenability of the underlying action is not the standard by which to judge whether the action was terminated in [plaintiff's] favor.' " ( Crowley , supra , 8 Cal.4th at p. 686,34 Cal.Rptr.2d 386 ,881 P.2d 1083 , quoting Warren v. Wasserman, Comden & Casselman (1990)220 Cal.App.3d 1297 , 1303,271 Cal.Rptr. 579 .)
Crowley then quotes with approval from the Court of Appeal decision in Jenkins , supra , 217 Cal.App.3d at p. 1300,
Crowley did advert to cryptic language in Albertson from which the Paramount General / Tabaz line of cases emerged, but only in the context of indicating how Freidberg unnecessarily strayed when it employed the "primary right theory ... in order to distinguish [ Albertson ], [because] Albertson was distinguishable on other grounds." ( Crowley , supra , 8 Cal.4th at p. 685,
Since Crowley was decided, this court on two occasions has discussed the favorable termination requirement in the context of an underlying defendant's partial success. In both cases, we relied on Crowley in concluding that the entire action must terminate in the defendant's favor in order to support a later claim for malicious prosecution.
In Dalany v. American Pacific Holding Corporation ,
In StaffPro , supra ,
[*74] Both StaffPro and Dalany construed Crowley 's discussion as declaring that, while the absence of probable cause element supports a malicious prosecution claim if any of the underlying claims were prosecuted without probable cause, that analysis is only conducted " 'after judgment had been reached in the plaintiff's favor in the prior action as a whole.' " ( Dalany , supra , 42 Cal.App.4th at pp. 829-830,
[*615] StaffPro , supra , 136 Cal.App.4th at pp. 1406-1408,
What StaffPro did not confront directly was the potential conflict between the logic of Crowley and the Supreme Court's earlier decision in Albertson . The Lanes argue we should decline to follow StaffPro in favor of the binding precedent and more "analogous" approach represented by Albertson .[5] They contend that under Albertson , a favorable result on "severable" claims can satisfy the favorable termination element notwithstanding an unfavorable outcome on other claims resulting in an adverse judgment.[6]
[*75] We are satisfied, however, that StaffPro correctly construed Crowley as requiring that a malicious prosecution plaintiff show "there [was] a favorable termination of the entire [underlying] action" in the plaintiff's favor ( Jenkins , supra , 217 Cal.App.3d at p. 1300,
Indeed, Crowley specifically approved Freidberg 's conclusion there was no favorable termination under the facts of Freidberg even though the underlying plaintiff in that case did not prevail on his contract claim (which sought $43,000 plus punitive damages) or on a tort claim (seeking a similar amount) and instead only partially prevailed on a common count by obtaining a $12,900 recovery. ( Freidberg , supra , 197 Cal.App.3d at pp. 383-384,
[*616] While Crowley 's general discussion of the favorable termination element, as well as its specific observations on the absence of favorable termination under the facts of Freidberg , support StaffPro 's construction of the favorable termination element, Crowley did leave some vestigial uncertainty (which the Lanes seize upon in this appeal) by failing to specifically disapprove Albertson 's cryptic discussion of the favorable termination requirement. ( Albertson , supra , 46 Cal.2d at p. 382,
But Crowley itself makes clear that Albertson 's comments on the favorable termination requirement apply, at most, in situations where a partial appeal has created a severable judgment. ( 8 Cal.4th at p. 685,
And although Crowley did not expressly overrule Albertson in this respect, we question if any part of the so-called "severability" analysis [*76] survives. A partially unsuccessful defendant's ability to maintain an action for malicious prosecution should not turn on the fortuity of whether both parties or only one party elect(s) to pursue an appeal from the initial judgment. Crowley 's overarching conclusion (as explained by StaffPro ) was that severable consideration of the issue of lack of probable cause " 'does not alter the rule there must first be a favorable termination of the entire action [citing Freidberg ],' " ( Crowley , supra , 8 Cal.4th at p. 686,
Because we are satisfied StaffPro properly construed Crowley , we agree with the trial court that the Lanes cannot establish the essential element of favorable termination because the entire underlying action was not terminated in the Lanes' favor. To the contrary, the undisputed material facts showed the judgment granted some of the relief sought by Bell in her cross-complaint. On Bell's claim for declaratory relief/partition, the court determined (contrary to the Lanes' claims asserted in their complaint[7] ) that Bell did have an interest in the property and valued her gross share in the property at $177,500. The court thus granted her claim for partition with an order that the Lanes had the right to acquire her interest in the property upon payment to Bell of the net share of her interest in the property. Under these circumstances, the Lanes cannot demonstrate the favorable termination element because the single judgment on Bell's cross-complaint, while partially in the Lanes' favor, was also partially in favor of Bell.
[*617] B. Law of the Case
DISPOSITION
The judgment is affirmed. Respondents are entitled to costs on appeal.
WE CONCUR:
BENKE, Acting P.J.
NARES, J.
The court's judgment calculated Bell's net share by subtracting from Bell's share (1) the $25,000 already paid to Bell by the Lanes, and (2) the amount owed by Bell to the Lanes under the jury's award of $40,753.80 on the Lanes' cause of action against Bell for breach of the JVA. It rejected the Lanes' remaining equitable causes of action against Bell insofar as they sought to declare void the deed which granted Bell an interest in the property and to cancel that deed.
Bell's claims of elder abuse and intentional infliction of emotional distress were resolved when the court granted the Lanes' nonsuit motion. Bell's remaining claims against the Lanes (for fraud, breach of contract, and breach of the implied covenant of good faith and fair dealing) were resolved against Bell by the jury's special verdict on those claims.
Although the Lanes conceded below that Supreme Court cases including Crowley , supra ,
StaffPro acknowledged the favorable termination analysis in Crowley was arguably dictum because it was not required for the decision in that case, but nevertheless concluded the dictum "carries persuasive weight and should be followed where it demonstrates a thorough analysis of the issue or reflects compelling logic." (StaffPro , supra , 136 Cal.App.4th at p. 1403, fn. 9,
The Lanes assert the more "analogous" case of Albertson "was specifically approved by StaffPro " and therefore implicitly argue that Albertson 's severability analysis can coexist with StaffPro 's analysis of the favorable termination requirement. However, the Lanes do not identify where the StaffPro court "specifically approved" Albertson , nor can we find any reference to Albertson in StaffPro . Nor can the Lanes reconcile their argument with StaffPro 's express recognition that the "severability analysis is improper in determining whether a malicious prosecution plaintiff has demonstrated favorable termination of an underlying lawsuit." (StaffPro , supra , 136 Cal.App.4th at p. 1405,
The Lanes also cite a post-Crowley decision, Franklin Mint Company v. Manatt, Phelps & Phillips, LLP (2010)
The Lanes' complaint the property action included equitable causes seeking to declare void the deed which granted Bell an interest in the property and to cancel that deed. The court, having found for Bell on her declaratory relief cause of action, necessarily rejected the Lanes' competing causes of action as part of its judgment.
See footnote *, ante .