Marijanovic v. Gray, York & Duffy

APPEAL from orders of the Superior Court of LosAngeles County, Gregory W. Alarcon, Judge. Reversed.

Flahavan Law Offices and William F. Flahavan onbehalf of Defendant and Appellant Gray, Jork & Duffy;Maxie Rheinheimer Stephens & Vrevich and Darin L.Wessel for Defendants and Appellants R.C. Sehnert,Inc. and Ron Sehnert.

Cameron, Pearlson & Foster and Richard J. Foster forAnte Marijanovic, aka Tony Marijanovic forDefendants and Respondents.

CROSKEY, J.

*1 A general contractor was sued by a condominiumowners association for latent defects in the constructionof the condominium complex. The general contractorcross-complained against the painting subcontractor forindemnity. Ultimately, the entire action settled withoutcontribution from the painter, and the painter wasvoluntarily dismissed without prejudice. The painterthen brought the instant malicious prosecution actionagainst the general contractor and its counsel.

The general contractor and its counsel each filedanti-SLAPP (Code Civ. Proc., § 425.16) motions,which were denied on the basis that the painter hadestablished a prima facie case of malicious prosecution.We disagree, concluding the evidence presented on theanti-SLAPP motions fails to establish an absence ofprobable cause to bring the underlying cross-complaintagainst the painter. That painter’s counsel hadrepresented to the general contractor’s counsel that thepainter was not liable for the defects alleged isinsufficient, as a matter of law, to establish a lack ofprobable cause to pursue the cross-complaint. Similarly,the fact that the painter introduced his own declarationof non-liability in opposition to the anti-SLAPP motionis also insufficient. The general contractor and itscounsel possessed evidence that painter was liable; thatpainter may not, in fact, have been liable cannot defeatprobable cause.

FACTUAL AND PROCEDURAL BACKGROUND

The pertinent facts are set forth in the complaint in theinstant action, and the exhibits thereto. On March 12,1999, Oakridge Condominium Association(“Condominium”) brought suit against itsbuilder/developer for latent defects in the constructionof the complex. Construction had been completed, anda notice of completion filed, in 1990. Condominium’scomplaint alleged numerous latent defects, includingthat “water-exposed exterior surfaces … including …walls, … decks, [and] patios … have failed, therebyallowing ponding and water entry into the walls andcommon areas, and causing damage….”

At some point, the general contractor on theCondominium complex, R.C. Sehnert, Inc. (“GeneralContractor” [FN1]), was named as a defendant byCondominium.

FN1. We use “General Contractor” to refercollectively to R.C. Sehnert, Inc. and RonSehnert, its officer and controllingshareholder.

On July 3, 2001, General Contractor filed across-complaint against several subcontractors who hadworked on the Condominium complex. At this point,General Contractor was represented solely by MaxieRheinheimer Stephens & Vrevich, LLP (“GeneralContractor’s First Attorney”). On September 7, 2001,General Contractor amended its cross-complaint toname the painter on the project, Ante Marijanovic akaTony Marijanovic dba Tony’s Painting (“Painter”), as apreviously-named Roe cross-defendant. By this point,a second law firm, Gray, York & Duffy, LLP (“GeneralContractor’s Second Attorney”) had been associated into assist in General Contractor’s representation. OnJanuary 23, 2002, Painter answered the cross-complaintwith a general denial.

*2 On February 26, 2002, Attorney Richard J. Foster(“Painter’s Counsel”) wrote a letter on behalf of Painterto General Contractor’s Second Attorney. The letterstated, in pertinent part: “I have reviewed the defectreport, and there is absolutely no basis to maintain thislawsuit against [Painter]. The only reference to paintingis a reference to chipped paint on the wood trim. As youknow, the paint was applied eleven years prior to thereport. Paint is not expected to last that long; wood isnormally repainted every five years. Thus, this is noreason to subject my client to the expense of thislitigation. [Painter] does not have insurance coveragefor this claim. As a result, this lawsuit is a hardship. Werespectfully request that you voluntarily dismiss[Painter].”

On February 27, 2002, General Contractor’s SecondAttorney responded as follows: “While I amsympathetic to your client’s uninsured status, there areissues raised by [Condominium] which precludedismissal. I do not know if you attended the siteinspection on January 30, 2002, or the defectpresentation on February 7, 2002, but these two eventsmade it clear that [Condominium] is claiming seriousproblems with the exterior finishes at this project.Certainly there are other parties who bear potentialliability as well as your client. Additionally, lack ofmaintenance and upkeep are valid defenses for all of us.However, the allegations regarding painting seem to gobeyond normal wear and tear, and directly to theoriginal workmanship. [Condominium] alleges that, inconnection with the horizontal siding, there was nopainting or sealing of cut edges, and no back-priming.Wood trim and privacy fences, likewise, were not backprimed. These inadequacies have contributed to theoverall deterioration of the exterior surfaces, dry rot,split wood, water intrusion, etc. [¶] Based on theallegations, I am not in a position to dismiss [Painter].”

On March 8, 2002, Condominium created a”Preliminary Defect List and Cost of Repair Estimate.”Condominium’s expert attached a cost number to eachdefect category. General Contractor retained its ownexpert to allocate responsibility for those expensesamong the different trades (and subcontractors)involved in the construction of the Condominiumcomplex. On July 3, 2002, General Contractor’s SecondCounsel wrote Painter’s Counsel, conveying asettlement demand in excess of $100,000, based onGeneral Contractor’s expert’s allocation (the relevantportion of which was attached to the letter).

Ultimately, the Condominium’s suit was settled withouta contribution from Painter. Nonetheless, GeneralContractor voluntarily dismissed its entirecross-complaint, with prejudice, on June 18, 2003.

On March 1, 2004, Painter brought the instantmalicious prosecution action against GeneralContractor, General Contractor’s First Attorney, andGeneral Contractor’s Second Attorney. Painter allegedmalicious prosecution in both the initiation and themaintenance of General Contractor’s cross-actionagainst him.

*3 General Contractor’s First Attorney filed ananti-SLAPP motion, arguing that a maliciousprosecution action is the proper subject of ananti-SLAPP motion, and that Painter would be unableto establish a prima facie case of malicious prosecution.Specifically, General Contractor’s First Attorney arguedthat Painter would be unable to establish GeneralContractor’s First Attorney lacked probable cause oracted with malice. Indeed, General Contractor’s FirstAttorney took the position that Painter’s complaint andthe exhibits thereto established probable cause as amatter of law, in that they established that Painter wasthe painting subcontractor on the Condominiumcomplex; and that Condominium had made allegationsagainst General Contractor “relating to the paintingwork.”

Painter opposed the anti-SLAPP motion by arguingthat his job on the Condominium complex had beenrestricted to painting the exterior surfaces; he had noobligation to waterproof or back prime any surface.Painter’s opposition argued General Contractor’s FirstAttorney “knows these facts are true.” Yet, painterprovided no evidence that General Contractor’s FirstAttorney knew this at the time it pursued thecross-complaint against Painter. The only evidencesubmitted in opposition to the anti-SLAPP motion wasa declaration from Painter’s Counsel stating that hemade that representation to General Contractor’sattorneys. Painter’s Counsel stated, “On numerousoccasions, I complained to [General Contractor's]attorneys that [Painter] merely painted exposed surfaceseleven years before the cross-complaint was filed. Ifurther explained that [Painter] was not responsible forinstalling any of the ‘systems’ which the [Condominium]alleged were defective. [General Contractor's] attorneysfirst argued that they filed the cross-complaint against[Painter] because the complaint in the [Condominium'saction] alleged defective ‘watertight systems[.'] Iexplained that [Painter] did not install any of thosesystems and that he wasn’t responsible for anywaterproofing or back priming.” Painter’s Counsel alsorepresented that General Contractor’s attorneys hadrelied on certain alleged defects identified inCondominium’s defect report in order to keep Painter inthe action, but that Painter’s Counsel had repeatedlyinformed them that Painter was not responsible forthose defects.

A hearing on the motion was held on August 10, 2004.At the hearing, Painter’s Counsel conceded that it hadbeen appropriate to initiate suit against Painter, butargued there was no probable cause to maintain thesuit. When a question was raised as to the sufficiency ofPainter’s Counsel’s declaration to defeat the anti-SLAPPmotion, Painter’s Counsel argued that his declarationwas sufficient because he was the one who informedGeneral Contractor’s attorneys that Painter had not beenresponsible for the defects. [FN2] The trial courtgranted General Contractor’s First Attorney’santi-SLAPP motion, concluding that Painter’s maliciousprosecution complaint, on its face, established theexistence of probable cause for General Contractor’scross-complaint against Painter. Painter did not appealthe grant of General Contractor’s First Attorney’santi-SLAPP motion.

FN2. Painter’s Counsel stated, “I was one ofthe players there. I’m the one reciting theseactual conversations. It’s not hearsay. It goesto their state of mind. We went over it indetail, and my guy was not responsible for anyof those systems.”

*4 On September 8, 2004, General Contractor’s SecondAttorney filed an anti-SLAPP motion, on the same basisas General Contractor’s First Attorney’s motion. [FN3]In opposition, Painter relied on his counsel’sdeclaration. In addition, he filed his own declaration, inwhich he stated, “I was under contract with [GeneralContractor] to paint exposed surfaces at the Project. Iwas not contracted for any waterproofing or backpriming.” Painter further declared that he had noresponsibility for any of the defects alleged in theCondominium’s complaint or defect report.

FN3. As the time to appeal the order grantingGeneral Contractor’s First Attorney’santi-SLAPP motion had not yet run, GeneralContractor’s Second Attorney did not arguethat order had any collateral estoppel effect.However, General Contractor’s SecondAttorney argued that the court had alreadydecided the issue presented by its motion.

The trial court denied General Contractor’s SecondAttorney’s motion. As to the dispositive issue ofwhether General Contractor’s Second Attorney hadprobable cause to initiate and maintain the actionagainst Painter, the trial court stated that Painter waspursued as a cross-defendant even after discoveryrevealed that he could not have caused any of thedefects alleged by the Condominium. GeneralContractor’s Second Attorney filed a timely notice ofappeal.

After successfully defeating General Contractor’sSecond Attorney’s anti-SLAPP motion, Painter servedGeneral Contractor with the complaint in the maliciousprosecution action. General Contractor brought ananti-SLAPP motion. Painter’s opposition relied on thesame two declarations as his opposition to GeneralContractor’s Second Attorney’s anti-SLAPP motion.The trial court denied the anti-SLAPP motion, statingit would not reconsider the ruling it had made onGeneral Contractor’s Second Attorney’s motion.General Contractor filed a timely notice of appeal.

We have consolidated the two cases on appeal.

CONTENTIONS OF THE PARTIES

On appeal, General Contractor and GeneralContractor’s Second Attorney (collectively,”Contractor Appellants”) argue the trial court erred inthat Painter failed to establish a prima facie case ofmalicious prosecution, specifically with respect to theelement of lack of probable cause. Additionally, theyargue the favorable ruling on General Contractor’s FirstAttorney’s anti-SLAPP motion should be givenpreclusive effect. We need not reach the second issue,as Contractor Appellants are correct on the first.

DISCUSSION

1. Process Governing an Anti-SLAPP Motion

Code of Civil Procedure section 425.16 ” ‘is designedto protect citizens in the exercise of their FirstAmendment constitutional rights of free speech andpetition. It is California’s response to the problemscreated by meritless lawsuits brought to harass thosewho have exercised these rights.’ ” ( Kyle v. Carmon(1999) 71 Cal.App.4th 901, 907.) A defendant againstwhom a SLAPP suit has been brought may file a specialmotion to strike, which will result in the complaint’sdismissal unless the plaintiff can establish a probabilityof prevailing on the claim. (Code Civ. Proc., § 425.16,subd. (b).)

Adjudication of an anti-SLAPP motion involves atwo-part process. First, the moving party bears theburden of establishing a prima facie showing that theplaintiff’s cause of action does, in fact, arise from thedefendant’s free speech or petition activity. Second, ifthe moving defendant meets that burden then the burdenshifts to the plaintiff to establish a probability ofprevailing. In order to establish such probability theplaintiff is required to make a prima facie showing offacts which would, if proven at trial, support a judgmentin plaintiff’s favor. (Kyle v. Carmon, supra, 71Cal.App.4th at p. 907.) “The burden on the plaintiff issimilar to the standard used in determining motions fornonsuit, directed verdict, or summary judgment.” (Ibid.)

*5 On appeal, we review the trial court’s decision denovo, engaging in the same two-step process todetermine, as a matter of law, whether the defendantmade its threshold showing the action was a SLAPP suitand whether the plaintiff established a probability ofprevailing. (Sylmar Air Conditioning v. PuebloContracting Services, Inc. (2004) 122 Cal.App.4th1049, 1056.) “In doing so, we consider ‘the pleadings,and supporting and opposing affidavits stating the factsupon which the liability or defense is based.’ ” (Id. atpp. 1056-1057.) We do not weigh the credibility of theevidence or its comparative probative strength.(Navellier v. Sletten (2003) 106 Cal.App.4th 763, 768.)

It is not disputed that the Contractor Appellantsestablished their initial burden. A malicious prosecutionaction is a proper basis for an anti-SLAPP motion.(HMS Capital, Inc. v. Lawyers Title Co. (2004) 118Cal.App.4th 204, 212-213.) We therefore considerwhether Painter established a probability of prevailingon his malicious prosecution action.

2. Malicious Prosecution

“In every case, in order to establish a cause of actionfor malicious prosecution a plaintiff must plead andprove that the prior proceeding commenced by or at thedirection of the malicious prosecution defendant, was:(1) pursued to a legal termination favorable to theplaintiff; (2) brought without probable cause; and (3)initiated with malice.” (Villa v. Cole (1992) 4Cal.App.4th 1327, 1335.) In this case, we areconcerned with the second element.

The evaluation of probable cause requires an objectivedetermination of the reasonableness of the pursuit of theunderlying lawsuit. That is, whether, on the basis of thefacts known to Contractor Appellants, the institutionand prosecution of the cross-action was legally tenable.(Zamos v. Stroud (2004) 32 Cal.4th 958, 971.) Weconsider whether any reasonable attorney would havethought the claim tenable. (Ibid.) “This rather lenientstandard for bringing a civil action reflects ‘theimportant public policy of avoiding the chilling of novelor debatable legal claims.’ ” (Wilson v. Parker, Covert& Chidester (2002) 28 Cal.4th 811, 817.) “A litigant orattorney who possesses competent evidence tosubstantiate a legally cognizable claim for relief doesnot act tortiously by bringing the claim, even if alsoaware of evidence that will weigh against the claim.Plaintiffs and their attorneys are not required, onpenalty of tort liability, to attempt to predict how a trierof fact will weigh the competing evidence, or toabandon their claim if they think it likely the evidencewill ultimately weigh against them. They have the rightto bring a claim they think unlikely to succeed, so longas it is arguably meritorious.” (Id. at p. 822.) “Counselwho receives interrogatory answers appearing to presenta complete defense might act reasonably by goingforward with the defendant’s deposition in light of thepossibility that the defense will, on testimonialexamination, prove less than solid. The reasonablenessof counsel’s persistence is, of course, a question of lawto be decided on a case-by-case basis….” (Zamos v.Stroud, supra, 32 Cal.4th at p. 970, fn. 9.)

*6 We consider the evidence presented by Painter onthe issue of whether Contractor Appellants hadprobable cause to initiate and maintain the cross-actionagainst Painter. The evidence consists solely ofPainter’s Counsel’s declaration to the effect that he hadtold Contractor Appellants that Painter had painted onlyexposed surfaces and was not responsible for any of thedefects alleged by Condominium. There was no signeddeclaration from Painter presented to ContractorAppellants while the action was pending. [FN4] Norwas there any indication Painter presented a copy ofany written contract between Painter and GeneralContractor setting forth the scope of Painter’s work.There was, in fact, no evidence of the limited scope ofPainter’s work beyond Painter’s Counsel’s bald assertionthat it was limited. In contrast, the ContractorAppellants were faced with a complaint from theCondominium which alleged a “fail[ure]” of”water-exposed exterior surfaces,” and a defect reportfrom their expert which attributed a certain percentageof fault for these failures to the painter of thosesurfaces. We conclude there was probable cause toinitiate and maintain the cross-action against Painter asa matter of law. The wholly-unsupported representationby opposing counsel that his client was not liablecannot be sufficient to defeat probable cause. [FN5]

FN4. Painter’s declaration submitted inopposition to the anti-SLAPP motionconstitutes some evidence that Painter wasnot, in fact, liable for the defects. However, itis not evidence that Contractor Appellantswere aware of his non-liability at the timethey pursued the cross-action.

FN5. Indeed, it could well constitutemalpractice for an attorney to drop a lawsuitfor which supporting evidence existed, merelybecause opposing counsel asserted the actionwas baseless.

There is a suggestion in the record that thecross-complaint was brought without probable causebecause it was untimely under the statute of limitations.This is incorrect. An action for latent constructiondefects must be brought within ten years. (Code Civ.Proc., § 337.15, subd. (a).) When an action is timelybrought under that section, a cross-complaint forindemnity in such an action is also timely. (Code Civ.Proc., § 337.15, subd. (c).) It is undisputed thatCondominium’s action for latent defects was timelyfiled, and that General Contractor’s cross-complaint forindemnity was also timely. Painter never argued to thecontrary; instead, Painter argued that since he hadpainted only the exposed surfaces of the building, anydefect in his work was patent, and therefore subject tothe four-year statute of limitations for patent defects.(Code Civ. Proc., § 337.1.) This argument depends onPainter’s evidence that Contractor Appellants knew thathis scope of work was limited to painting exposedsurfaces. Since Painter has not established thatContractor Appellants lacked probable cause to believehe was also responsible for waterproofing and backpriming, he has similarly failed to establish thatContractor Appellants lacked probable cause to believehe was responsible for latent defects. Therefore,Contractor Appellants had probable cause to believetheir cross-complaint was timely.

As Painter has failed to establish a prima facie case thatContractor Appellants lacked probable cause to bringand maintain the underlying cross-action against him,the trial court erred in denying their anti-SLAPPmotions.

DISPOSITION

*7 The orders denying the anti-SLAPP motions arereversed. The trial court is directed to enter new anddifferent orders granting the anti-SLAPP motions andentering judgment of dismissal in favor of ContractorAppellants. Painter is to pay Contractor Appellants’costs on appeal.

We Concur: KLEIN, P.J., and ALDRICH, J.

— Cal.Rptr.3d —-, 2006 WL 760559 (Cal.App. 2Dist.)

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