What are the elements of the tort of malicious prosecution?

The common law tort of malicious prosecution originated as a remedy for an individual who had been subjected to a maliciously instituted criminal charge, but in California, as in most common law jurisdictions, the tort was long ago extended to afford a remedy for the malicious prosecution of a civil action. (See Eastin v. Bank of Stockton (1884) 66 Cal. 123, 126-127, 4 P. 1106; Grant v. Moore (1866) 29 Cal. 644.) Under the governing authorities, in order to establish a cause of action for malicious prosecution of either a criminal or civil proceeding, a plaintiff must demonstrate "that the prior action (1) was commenced by or at the direction of the defendant and was pursued to a legal termination in his, plaintiff's, favor [citations]; (2) was brought without probable cause [citations]; and (3) was initiated with malice [citations]." (Bertero v. National General Corp. (1974) 13 [47 Cal.3d 872] Cal.3d 43, 50, 118 Cal.Rptr. 184, 529 P.2d 608; Rest.2d Torts, §§ 653-681B.)

As noted above, in a malicious prosecution action, the plaintiff, in addition to establishing that the prior action was terminated in its favor, must prove both (1) that the prior action was brought without probable cause and (2) that the action was initiated with malice. (See, e.g., Bertero v. National General Corp., supra, 13 Cal.3d at p. 50, 118 Cal.Rptr. 184, 529 P.2d 608.)

The "malice" element of the malicious prosecution tort relates to the subjective intent or purpose with which the defendant acted in initiating the prior action, and past cases establish that the defendant's motivation is a question of fact to be determined by the jury. (See, e.g., Runo v. Williams (1912) 162 Cal. 444, 450, 122 P. 1082; see generally Rest.2d Torts, § 681B, subd. (2)(b).)

[47 Cal.3d 875] By contrast, the existence or absence of probable cause has traditionally been viewed as a question of law to be determined by the court, rather than a question of fact for the jury. As this court stated emphatically in the leading case of Ball v. Rawles (1892) 93 Cal. 222, 227, 28 P. 937; "Malice is always a question of fact for the jury, but whether the defendant had or had not probable cause for instituting the prosecution[765 P.2d 504] is always a matter of law to be determined by the court. If the facts upon which the defendant acted are undisputed, the court, according as it shall be of the opinion that they constituted probable cause or not, either will order a nonsuit (or direct a verdict for the defendant), or it will submit the other issues to the jury; but whether admitted or disputed, the question is still one of law to be determined by the court from the facts established in the case." (See generally Rest.2d Torts, §§ 674, com. h, 681B, subd. (1)(c); Annot. (1963) 87 A.L.R.2d 183, 186-188; 1 Harper et al., The Law of Torts, supra, §§ 4.5, 4.8, pp. 441-442, 476; Prosser & Keeton on Torts (5th ed. 1984) § 119, p. 882.)

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Accordingly, when, as in this case, the facts known by the attorney are not in dispute, the probable cause issue is properly determined by the trial court under an objective standard; it does not include a determination whether the attorney subjectively believed that the prior claim was legally tenable. (See Prosser & Keeton on Torts, supra, § 119, pp. 876-877; Dobbs, Belief and Doubt in Malicious Prosecution and Libel, supra, 21 Ariz.L.Rev. 607, 609-611.)

Lest there be any confusion, however, we strongly emphasize that our conclusion in this regard does not by any means suggest that an attorney who institutes an action which he does not believe is legally tenable is free from the risk of liability for malicious prosecution. If the trial court concludes that the prior action was not objectively tenable, evidence that the defendant attorney did not subjectively believe that the action was tenable would clearly be relevant to the question of malice. Inasmuch as an attorney who does not have a good faith belief in the tenability of an action will [47 Cal.3d 882] normally assume that a court is likely to come to the same conclusion, the malicious prosecution tort will continue to deter attorneys from filing actions which they do not believe are legally tenable.

The tort of malicious prosecution does not have to be directed to an entire lawsuit or even to an entire cause of action. (Bertero, supra, 13 Cal.3d at p. 57, fn. 5, 118 Cal.Rptr. 184, 529 P.2d 608 ["an action for malicious prosecution lies when but one of alternate theories of recovery is maliciously asserted"]; Singleton v. Perry (1955) 45 Cal.2d 489, 497, 289 P.2d 794 [" ‘ "it is not necessary that the whole proceeding be utterly groundless" ’ "]; Kreeger v. Wanland (2006) 141 Cal.App.4th 826, 834, 46 Cal.Rptr.3d 790 ["[a] claim of malicious prosecution may be based on a single ground for liability alleged in the complaint that lacks probable cause"; "a single cause of action that states several theories of liability will force the defendant to negate each theory to escape liability"].) Very simply, "someone may be liable for malicious prosecution for his or her active role in the malicious prosecution of only a portion of a proceeding." (Zucchet v. Galardi (2014) 229 Cal.App.4th 1466, 1484, 178 Cal.Rptr.3d 363.) Where only a portion of the claim or complaint is maliciously prosecuted, the issue becomes one of proof of damages, not of liability: "[I]n the case of the assertion of a maliciously prosecuted [claim] with one for which there was probable cause [citation], the burden of proving

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such an apportionment must rest with the party whose malicious conduct created the problem." (Bertero, at p. 60, 118 Cal.Rptr. 184, 529 P.2d 608.)

For purposes of meeting their prong two responsive burden as to the first element of the cause of action for malicious prosecution, Appellants must present evidence of a prima facie case that the Class Action

[275 Cal.Rptr.3d 532]

was commenced by Respondents and pursued to a legal termination in Appellants' favor. (Zamos, supra, 32 Cal.4th at p. 965, 12 Cal.Rptr.3d 54, 87 P.3d 802.) There is no dispute both that the Class Action was filed by N & B (the predecessor to N & T) and Nicholas and that the Class Action was prosecuted to judgment by N & T, Nicholas, and Tomasevic (previously identified as Respondents).

Here, in the Class Action, a judgment of dismissal was entered in favor of Appellants (i.e., the defendants in the prior action for purposes of Appellants' malicious prosecution claim) and against the named plaintiff, by which "[t]he action of the class" was also dismissed. The judgment followed the trial court's ruling on cross-motions: (1) The court denied a motion filed by Respondents (as counsel, on behalf of their clients, the named plaintiff and the certified class) to specially set the matter for trial before the expiration of the statutory deadline in which to bring the case to trial (§§ 583.360, 583.310); and (2) the court granted a motion brought on behalf of Appellants (the defendants in the Class Action) to dismiss the action for delay in prosecution (§ 583.410). In its written order, the court reasoned:

"The Court is not persuaded that [the named plaintiffs] have diligently sought to prepare the matter for trial. [The current named plaintiff']s deposition has not been taken and was apparently cancelled ... by [N & T], despite [counsel's] promises to the Court that it would proceed [the next week]. The Class has not been notified despite certification [and appointment of class counsel more than three and a half] years ago. Defendants [(i.e., Appellants)] have persuasively argued that they will be prejudiced by an expedited trial, and that [the named] Plaintiff's delays have caused witnesses to become unavailable or difficult to locate. [¶] ... [The current named] Plaintiff will not be able to begin trial before the expiration of the 5[-]year statute (CCP 583.360)."

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In at least some circumstances, the dismissal of a prior action as a result of a failure to provide discovery will satisfy the favorable termination element of a malicious prosecution claim. In Ross v. Kish (2006) 145 Cal.App.4th 188, 51 Cal.Rptr.3d 484, for example, the trial court dismissed the prior action because Kish refused to be deposed. (Id. at p. 191, 51 Cal.Rptr.3d 484.) In Ross's later action against Kish for malicious prosecution, the appellate court affirmed the trial court's denial of

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Kish's anti-SLAPP motion. (Ibid.) With regard to Ross's prong two showing to establish the requisite favorable termination of the prior action, the appellate court ruled: "[T]he dismissal of Kish's lawsuit for refusing to be deposed, like the dismissal for failure to prosecute in Minasian ..., supra, 80 Cal.App.3d 823 [145 Cal.Rptr. 829], reflects adversely on the merits of the action based on the natural assumption that one does not simply abandon a meritorious action once instituted. Consequently, the dismissal must be seen as a termination favorable to Ross." (Ross, at p. 200, 51 Cal.Rptr.3d 484, italics added.) In Ross, because the dismissal of the prior action was based on the refusal by Kish (the plaintiff in the prior action) to attend his deposition, the court concluded that the dismissal of the prior action reflected on the merits. Here, for the same reason, a jury reasonably could find that N & T 's refusal to produce Ector for deposition, despite promises otherwise, "reflects adversely on the merits of the action based on the natural assumption that one does not simply abandon a meritorious action once instituted."¹⁴ (Ibid.; see also Lackner, supra, 25 Cal.3d at p. 751, 159 Cal.Rptr. 693, 602 P.2d 393; Minasian, supra, 80 Cal.App.3d at p. 827, 145 Cal.Rptr. 829.)

Finally, in dismissing the Class Action, the court found that the "delays [by N & T on behalf of the named plaintiff] have caused witnesses to become unavailable or difficult to locate." This evidence supports an inference, if not an actual finding, that without the delays Respondents caused Appellants (the defendants in the Class Action) would have discovered facts that reflect adversely on the merits of the Class Action claims. That is because class counsel like Respondents do not abandon a meritorious action once a class has been certified. (See Lackner, supra, 25 Cal.3d at p. 751, 159 Cal.Rptr. 693, 602 P.2d 393; Minasian, supra, 80 Cal.App.3d at p. 827, 145 Cal.Rptr. 829.)

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Based on our de novo review and the findings and evidence discussed above, we have little difficulty concluding both that the dismissal of the Class Action for a delay in prosecution based on a lack of diligence in preparing for trial " ‘does reflect on the merits of the [Class A]ction’ " (Lackner, supra, 25 Cal.3d at pp. 750-751, 159 Cal.Rptr. 693, 602 P.2d 393), and "that reflection [on the merits] is favorable to [Appellants] in [this appeal]." (Minasian, supra, 80 Cal.App.3d at p. 827, 145 Cal.Rptr. 829).

"The ‘malice’ element of the malicious prosecution tort relates to the subjective intent or purpose with which the defendant acted in initiating the

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prior action." (Sheldon Appel Co. v. Albert & Oliker (1989) 47 Cal.3d 863, 874, 254 Cal.Rptr. 336, 765 P.2d 498.) "As an element of malicious prosecution, malice ‘reflects the core function of the tort, which is to secure compensation for harm inflicted by misusing the judicial system, i.e., using it for something other than to enforce legitimate rights and secure remedies to which the claimant may tenably claim an entitlement.’ " (Lanz v. Goldstone (2015) 243 Cal.App.4th 441, 466–467, 197 Cal.Rptr.3d 227.) "Malice ‘ "may range anywhere from open hostility to indifference" ’; it is not limited to ‘ "ill will toward plaintiff but exists when the proceedings are [prosecuted] primarily for an improper purpose." ’ " (Id. at p. 466, 197 Cal.Rptr.3d 227.) " ‘Malice may also be inferred from the facts establishing lack of probable cause’ " (Soukup, supra, 39 Cal.4th at p. 292, 46 Cal.Rptr.3d 638, 139 P.3d 30 ), and lack of probable cause is a factor in considering whether the claim was prosecuted with malice. (HMS Capital, Inc. v. Lawyers Title Co. (2004) 118 Cal.App.4th 204, 218, 12 Cal.Rptr.3d 786.) "Since parties rarely admit an improper motive, malice is usually proven by circumstantial evidence and inferences drawn from the evidence." (Ibid.)

"The common law tort of malicious prosecution originated as a remedy for an individual who had been subjected to a maliciously instituted criminal charge, but in California, as in most common law jurisdictions, the tort was long ago extended to afford a remedy for the malicious prosecution of a civil action." (Sheldon Appel Co. v. Albert & Oliker (1989) 47 Cal.3d 863, 871, 254 Cal.Rptr. 336, 765 P.2d 498 (Sheldon Appel).) The tort consists of three elements. The underlying action must have been: (i) initiated or maintained by, or at the direction of, the defendant, and pursued to a legal termination in favor of the malicious prosecution plaintiff; (ii) initiated or maintained without probable cause; and (iii) initiated or maintained with

[221 Cal.Rptr.3d 440]

malice. (Ibid.; see

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Zamos v. Stroud (2004) 32 Cal.4th 958, 970, 12 Cal.Rptr.3d 54, 87 P.3d 802 (Zamos); see also Soukup v. Law Offices of Herbert Hafif (2006) 39 Cal.4th 260, 297, 46 Cal.Rptr.3d 638, 139 P.3d 30 (Soukup).)¹

The interim adverse judgment rule concerns the probable cause element of a malicious prosecution claim. In contrast to the existence of malice—a question of fact regarding "the subjective intent or purpose with which [a litigant] acted in" prosecuting the underlying action—the existence of probable cause is a question of law to be determined as an objective matter. (

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Sheldon Appel, supra, 47 Cal.3d at pp. 874, 875, 254 Cal.Rptr. 336, 765 P.2d 498.) "[T]he probable cause element calls on the trial court to make an objective determination of the ‘reasonableness' of the defendant's conduct, i.e., to determine whether, on the basis of the facts known to the defendant, the institution of the prior action was legally tenable," as opposed to whether the litigant subjectively believed the claim was tenable. (Id. at p. 878, 254 Cal.Rptr. 336, 765 P.2d 498.) A claim is unsupported by probable cause only if " ‘ "any reasonable attorney would agree [that it is] totally and completely without merit." ’ " (Wilson, supra, 28 Cal.4th at p. 817, 123 Cal.Rptr.2d 19, 50 P.3d 733; accord, Sheldon Appel, at p. 885, 254 Cal.Rptr. 336, 765 P.2d 498; In re Marriage of Flaherty (1982) 31 Cal.3d 637, 650, 183 Cal.Rptr. 508, 646 P.2d 179; see also Zamos, supra, 32 Cal.4th at p. 970, 12 Cal.Rptr.3d 54, 87 P.3d 802.) "This rather lenient standard for bringing a civil action reflects ‘the important public policy of avoiding the chilling of novel or debatable legal claims.’ " (Wilson, supra, at p. 817, 123 Cal.Rptr.2d 19, 50 P.3d 733.) The standard safeguards the right of both attorneys and their clients " ‘ "to present issues that are arguably correct, even if it is extremely unlikely that they will win." ’ " (Ibid., quoting Flaherty, supra, at p. 650, 183 Cal.Rptr. 508, 646 P.2d 179.)

As we explained in Wilson, California courts have long embraced the so-called interim adverse judgment rule, under which "a trial court judgment or verdict in favor of the plaintiff or prosecutor in the underlying case, unless obtained by means of fraud or perjury, establishes probable cause to bring the underlying action, even though the judgment or verdict is overturned on appeal or by later ruling of the trial court." (Wilson, supra, 28 Cal.4th at p. 817, 123 Cal.Rptr.2d 19, 50 P.3d 733.) This rule reflects a recognition that "[c]laims that have succeeded at a hearing on the merits, even if that result is subsequently reversed by a trial or appellate court, are not so lacking in potential merit that a reasonable attorney or litigant would necessarily have recognized their frivolousness." (Id. at p. 818, 123 Cal.Rptr.2d 19, 50 P.3d 733.) That is to say, if a claim succeeds at a hearing on the merits, then, unless that success has been procured by certain improper means, the claim cannot be "totally and completely without merit." (Zamos, supra, 32 Cal.4th at p. 970, 12 Cal.Rptr.3d 54, 87 P.3d 802.) Although the rule arose from cases that had been resolved after trial, the rule has also been applied to the "denial of defense summary

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judgment motions, directed verdict motions, and similar efforts at pretrial termination of the underlying case." (Wilson, supra, 28 Cal.4th at p. 819, 123 Cal.Rptr.2d 19, 50 P.3d 733; see also

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id. at pp. 817–820 & fn. 4, 824, 123 Cal.Rptr.2d 19, 50 P.3d 733; Roberts v. Sentry Life Insurance (1999) 76 Cal.App.4th 375, 90 Cal.Rptr.2d 408 [denial of defense motion for summary judgment]; Davis v. Butler (1999) 240 Ga.App. 72, 522 S.E.2d 548 [same]; Porous Media Corp. v. Pall Corp. (8th Cir. 1999) 186 F.3d 1077 [denial of motion for directed verdict].)

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We also recognized that the interim adverse judgment rule has its limits. The rule applies only to rulings regarding the merits of the claim, not those that rest "solely on technical or procedural grounds." (Wilson, supra, 28 Cal.4th at p. 823, 123 Cal.Rptr.2d 19, 50 P.3d 733.) And even where a ruling is based on the court's evaluation of the merits of the claim, the ruling does not establish the existence of probable cause if the ruling is "shown to have been obtained by fraud or perjury." (Id. at p. 820, 123 Cal.Rptr.2d 19, 50 P.3d 733.) While plaintiffs and their attorneys have "the right to bring a claim they think unlikely to succeed, so long as it is arguably meritorious" (id. at p. 822, 123 Cal.Rptr.2d 19, 50 P.3d 733), they have no right to mislead a court about the merits of a claim in an attempt to procure a favorable ruling, and such a ruling can provide no reliable indication that the claim was objectively tenable.

Unlike a finding that the summary judgment ruling was obtained by fraud or perjury, the trial court's posttrial finding that the suit was brought in "bad faith" within the meaning of the California Uniform Trade Secrets Act does not vitiate the trial court's earlier finding that FLIR's and Indigo's suit had some arguable merit. The trial court's finding of "bad faith" rested on two conclusions: that the suit had been brought in "subjective bad faith"—that is,

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for the subjective

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purpose of preventing Parrish and Fitzgibbons from launching a competing enterprise—and in "objective bad faith," meaning that the suit was objectively "specious." Neither conclusion is inconsistent with the court's earlier determination that the suit had sufficient arguable merit to survive summary judgment.

For purposes of the malicious prosecution tort, the existence of subjective bad faith is relevant to the question whether the suit was brought with malice, which, as our cases have made clear, concerns a litigant's subjective belief. (E.g., Sheldon Appel, supra, 47 Cal.3d at p. 874, 254 Cal.Rptr. 336, 765 P.2d 498.) But it is a separate question whether, objectively speaking, defendants' suit was supported by probable cause. And as to that point, the trial court's finding of objective bad faith in the underlying action was not a finding that the action completely lacked merit. The trial court and Court of Appeal in the underlying action relied on the definition of bad faith set out in Gemini, supra, 95 Cal.App.4th at page 1262, 116 Cal.Rptr.2d 358.² The Court of Appeal in

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Gemini reasoned that a finding that an action was prosecuted in bad faith did not require that " ‘[a]ny reasonable attorney would agree [that the action] is totally and completely without merit.’ " (Gemini, at p. 1262, 116 Cal.Rptr.2d 358, quoting In re Marriage of Reese & Guy (1999) 73 Cal.App.4th 1214, 1220–1221, 87 Cal.Rptr.2d 339.) Instead, a court need only find "objective speciousness," which it may do even if an action "may superficially appear to have merit." (Gemini, at p. 1262, 116 Cal.Rptr.2d 358.) By contrast, we have made clear 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." (Zamos, supra, 32 Cal.4th at p. 970, 12 Cal.Rptr.3d 54, 87 P.3d 802.) Because the superior court's finding of bad faith in this case did not entail a finding that "any reasonable attorney would agree" that the action was "totally and completely without merit" (ibid.), the finding of bad faith did not invalidate the trial court's earlier conclusion, at the summary judgment stage, that the suit had at least some arguable merit.³

The presumption under the interim adverse judgment rule is subject to an exception where the initial victory in the prior action—i.e., the denial of the defendant's summary judgment motion—"was induced by materially false facts submitted in opposition" to the motion. (Roberts, supra , 76 Cal.App.4th at p. 384, 90 Cal.Rptr.2d 408.) That is because, "if denial of summary judgment was induced by materially false facts submitted in opposition, equating denial with probable cause might be wrong. Summary judgment might have been granted but for the false evidence."⁹ (Ibid.) More than a century ago, our Supreme Court described this principle, known as the fraud exception to the interim adverse judgment rule, as follows: "Certainly, if a man has procured an unjust judgment by the knowing use of false and perjured testimony, he has perpetrated a great private wrong against his adversary.... [T]he general rule now is, ‘that if the declaration or complaint shows a conviction of the plaintiff, yet if it be averred that the conviction was procured by fraud, perjury or subornation of perjury, or other unfair conduct on the part of the defendant, the presumption of probable cause is effectually rebutted.’ "¹⁰ (Carpenter, supra, 153 Cal. at p. 218, 94 P. 879 [malicious prosecution action following the reversal of a criminal conviction based on what the malicious prosecution plaintiff contended was defendants' presentation to the grand jury of "unlawfully procured false evidence"].)

Most recently, our Supreme Court explained the reason for an application of the fraud exception to the interim adverse judgment rule: "[W]hen a litigant relies on evidence that she knows to be false, she is not entitled to reap the benefits of the interim adverse judgment rule by deceiving a court into believing that her claim has merit." (Parrish, supra, 3 Cal.5th at p. 782, 221 Cal.Rptr.3d 432, 400 P.3d 1.) In applying this standard, the focus should be on " ‘the facts known to the [litigant]’ accused of malicious prosecution." (Ibid.)

Finally, Tamara complains that Kevin's evidentiary showing does not establish a prima facie showing of the elements of the crime of perjury as

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defined at Penal Code section 118.¹⁶ Such a showing is not necessary. The Supreme Court long ago held that fraud or perjury " ‘or other unfair conduct’ " could preclude application of the interim adverse judgment rule. (Carpenter, supra, 153 Cal. at p. 218, 94 P. 879.) We have applied the fraud exception to the interim adverse judgment rule based on the standard set forth in Roberts, supra, 76 Cal.App.4th at page 384, 90 Cal.Rptr.2d 408 (the exception applies "if denial of summary judgment [in the prior action] was induced by materially false facts submitted in opposition"), as recently described by our Supreme Court in Parrish, supra, 3 Cal.5th at page 782, 221 Cal.Rptr.3d 432, 400 P.3d 1 (the exception applies when, in opposition to a defense summary judgment motion in the prior action, "a litigant relies on evidence that she knows to be false"). At a minimum, an application of the exception requires that the person making the allegedly false statements " ‘knew, or, in the exercise of reasonable diligence should have known, that his representations were false.’ " (Ibid.) Whether Kevin can prove this at trial is not before us; our ruling is based solely on Kevin's prima facie showing of evidence that Tamara knew, or reasonably should have known, that her declaration testimony in the Marvin Action regarding an express oral agreement (to share equally in all the assets Kevin acquired after the parties met in 1989) was false.

For the foregoing reasons, Kevin met his burden of establishing that the trial court erred in ruling that he did not present a prima case for the application of the fraud exception to the interim adverse judgment rule. Based on our de novo review, we conclude that, for purposes of prong two of the anti-SLAPP statute (§ 425.16, subd. (b)(2)), if we credit the evidence that Kevin submitted in opposition to Tamara's anti-SLAPP's motion, including favorable inferences from that evidence (Cuevas-Martinez, supra , 35 Cal.App.5th at p. 1117, 248 Cal.Rptr.3d 200), Kevin set forth a sufficient prima facie showing of facts that he will prevail in proving that Tamara lacked probable cause to initiate or maintain the Marvin Action. (Sweetwater, supra, 6 Cal.5th at p. 940, 243 Cal.Rptr.3d 880, 434 P.3d 1152.) By this ruling—indeed, by any statement contained in this opinion—we express no view as to whether Kevin will or will not be able to prove to the satisfaction of a trier of fact any of the three elements of his cause of action for malicious prosecution. (§ 425.16, subd. (b)(3).¹⁷ )