Fleishman v. Superior Court

Opinion

David M. Fleishman (petitioner), an attorney for Sunterra Corporation (hereafter Sunterra), seeks extraordinary writ review of the trial

Facts and Procedural History

Petitioner filed the Sunterra action in July 1999. The complaint alleged as follows: Salisbury was employed by Sunterra to sell time-share interests in the San Luis Bay Inn (hereafter the Inn). In April 1999 Sunterra terminated his employment. Salisbury thereafter “solicited owners of timeshare interests [in] the . . . Inn ... to sell their timeshare interests using [Salisbury] as broker[] and salesperson[] in the transaction.” He induced Craig and Anne Swanson (hereafter the Swansons) to terminate a contract with Sunterra for the purchase of a time-share interest in the Inn. In addition, Salisbury misappropriated Sunterra’s trade secrets, falsely advertised that he was affiliated with the Inn, and conducted his brokerage activities under unlicensed fictitious business names.

The Sunterra complaint contained six causes of action: (1) intentional interference with Sunterra’s contractual relationship with the Swansons; (2) unfair competition; (3) false advertising; (4) conducting real estate brokerage activities under unlicensed fictitious business names (Cal. Code Regs., tit. 10, § 2731); (5) misappropriation of trade secrets in violation of the Uniform Trade Secrets Act (Civ. Code, § 3426 et seq.); (6) common law misappropriation of trade secrets. Sunterra sought damages under the first and sixth causes of action, injunctive relief under the second, third, and fourth causes of action, and both damages and injunctive relief under the fifth cause of action.

The trial court granted Sunterra’s application for a temporary restraining order. It subsequently issued a preliminary injunction prohibiting Salisbury from: (1) destroying documents memorializing Sunterra’s trade secrets; (2) disclosing or using Sunterra’s trade secrets; (3) “soliciting any customers of [Sunterra] whose identities or product preferences became known to Salisbury during his employment with [Sunterra];” (4) making false or misleading statements concerning his affiliation with Sunterra, the Inn, or his provision of real estate sales services; and (5) “conducting real estate sales and brokerage activities under [fictitious] business names without possession

In November 2000 Sunterra voluntarily dismissed its action without prejudice. In November 2001 Salisbury filed the within malicious prosecution action against petitioner. The complaint consisted of a single cause of action. The trial court overruled petitioner’s demurrer and denied his motion for judgment on the pleadings.

Standard of Review

“A motion for judgment on the pleadings performs the same function as a general demurrer, and hence attacks only defects disclosed on the face of the pleadings or by matters that can be judicially noticed. [Citations.]” (Cloud v. Northrop Grumman Corp. (1998) 67 Cal.App.4th 995 , 999 [ 79 Cal.Rptr.2d 544 ].) “ ‘[W]e are not bound by the determination of the trial court, but are required to render our independent judgment on whether a cause of action has been stated.’ [Citation.]” (Lance Camper Manufacturing Corp. v. Republic Indemnity Co. (1996) 44 Cal.App.4th 194 , 198 [ 51 Cal.Rptr.2d 622 ].)

Issuance of Preliminary Injunction Conclusively Establishes Probable Cause for Bringing Action

“[T]o 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].’ [Citations.]” (Sheldon Appel Co. v. Albert & Oliker (1989) 47 Cal.3d 863 , 871-872 [ 254 Cal.Rptr. 336 , 765 P.2d 498 ].)

“Probable cause, for purposes of a malicious prosecution action, is a legal issue, not a factual one. [Citation.]” (Wilson v. Parker, Covert & Chidester (2002) 28 Cal.4th 811 , 825 [ 123 Cal.Rptr.2d 19 , 50 P.3d 733 ] (hereafter Wilson).) “[P]robable cause exists if ‘any reasonable attorney would have thought the claim tenable.’ [Citation.] . . . Only those actions that ‘ “any reasonable attorney would agree [are] totally and completely without merit” ’ may form the basis for a malicious prosecution suit. [Citation.]” (I d., at p. 817.)

“Claims that have succeeded at a hearing on the merits, even if that result is subsequently reversed by the trial or appellate court, are not so lacking in

Before issuing a preliminary injunction, the trial court must “carefully weigh the evidence and decide whether the facts require[] such relief.” (Kaplan’s Fruit & Produce Co. v. Superior Court (1979) 26 Cal.3d 60 , 66 [ 160 Cal.Rptr. 745 , 603 P.2d 1341 ].) The court evaluates the credibility of witnesses and makes factual findings on disputed evidence. (People v. Landlords Professional Services, Inc. (1986) 178 Cal.App.3d 68 , 71 [ 223 Cal.Rptr. 483 ].) A less strict standard applies to an anti-SLAPP motion. In considering such a motion, the trial court “does not weigh the credibility or comparative probative strength of competing evidence . . . .” (Wilson, supra, 28 Cal.4th at p. 821.) Nor does it “decide disputed questions of fact. . . .” (Id., at p. 822.) An anti-SLAPP motion must be denied “if the plaintiff presents evidence establishing a prima facie case which, if believed by the trier of fact, will result in a judgment for the plaintiff. [Citation.]” (Mattel, Inc. v. Luce, Forward, Hamilton & Scripps (2002) 99 Cal.App.4th 1179 , 1188 [ 121 Cal.Rptr.2d 794 ].)

Salisbury contends that the issuance of a preliminary injunction conclusively establishes probable cause only if the trial court has conducted “a full and fair evidentiary hearing on the merits.” Along with his return to the alternative writ of mandate, Salisbury submitted a declaration under penalty of perjury alleging that “no real hearing took place” because the trial court erroneously precluded him from presenting evidence at the hearing. Salisbury claims that the basis for the court’s preclusion ruling was that he “had not filed a responsive pleading or opposition within the specified time period.”

In any event, for our purposes it is inconsequential whether the trial court committed procedural error at the hearing on the preliminary injunction. The trial court credited the verified complaint and a declaration by an officer of Sunterra that substantiated legally cognizable claims. Pursuant to our Supreme Court’s reasoning in Wilson, this prima facie showing was alone sufficient to establish probable cause irrespective of whether Salisbury was erroneously precluded from presenting evidence to the contrary: “A litigant or attorney who possesses competent evidence to substantiate a legally cognizable claim for relief does not act tortiously by bringing the claim, even if also aware of evidence that will weigh against the claim. Plaintiffs and their attorneys are not required, on penalty of tort liability, to attempt to predict how a trier of fact will weigh the competing evidence, or to abandon their claim if they think it likely the evidence will ultimately weigh against them. They have the right to bring a claim they think unlikely to succeed, so long as it is arguably meritorious. [Citation.]” (Wilson, supra, 28 Cal.4th a p. 822, fn. omitted.) “Indeed, a plaintiff or his or her attorney may not be aware, when initiating the action, of evidence in the defendant’s possession that weighs against the claim. Considering the plaintiffs prima facie case alone is appropriate for this reason as well, for probable cause to bring an action depends on the facts known to the litigant or attorney at the time the action is brought. [Citation.]” (Id., at p. 822, fn. 6.)

No evidence has been presented that the trial court’s ruling was obtained by fraud or peijury. The issuance of the preliminary injunction was based upon “a hearing on the merits” and not “solely on technical or procedural grounds.” (Wilson, supra, 28 Cal.4th at p. 823.) Its issuance, therefore, conclusively establishes probable cause for bringing the underlying causes of action.

“To preclude a later claim of malicious prosecution, a plaintiff must have probable cause for each cause of action it alleges against a defendant. [Citation.]” (Videotape Plus, Inc. v. Lyons (2001) 89 Cal.App.4th 156 , 161 [ 107 Cal.Rptr.2d 1 ]; accord, Crowley v. Katleman (1994) 8 Cal.4th 666 , 671 [ 34 Cal.Rptr.2d 386 , 881 P.2d 1083 ]; Bertero v. National General Corp. (1974) 13 Cal.3d 43 , 57, fn. 5 [ 118 Cal.Rptr. 184 , 529 P.2d 608 , 65 A.L.R.3d 878 ].) Consequently, if the issuance of the preliminary injunction establishes probable cause for some but not all of Sunterra’s six causes of action, the trial court properly denied petitioner’s motion for judgment on the pleadings. We hold that where, as here, all causes of action are reasonably related to the preliminary injunction, the granting of injunctive relief conclusively establishes that each cause of action was brought with probable cause.

Salisbury contends that the preliminary injunction was unrelated to the first, fifth, and sixth causes of action. His contention is clearly without merit as to the fifth and sixth causes of action, which sought damages and injunctive relief for statutory and common law misappropriation of trade secrets. The preliminary injunction prohibited Salisbury from destroying documents memorializing Sunterra’s trade secrets and from disclosing or using its trade secrets. The trial court would not have prohibited these actions unless it had concluded that there was a reasonable probability Sunterra would prevail on the merits on the causes of action for misappropriation of trade secrets.

The first cause of action, intentional interference with a contractual relationship, presents a closer question. It alleged that the Swansons and Sunterra had entered into a written contract whereby the Swansons agreed to purchase a timeshare interest in the Inn. Salisbury induced the Swansons to terminate the contract by offering to resell them a time-share interest in the Inn at a much lower price. This cause of action sought only damages, and the preliminary injunction did not prohibit Salisbury from intentionally interfering with Sunterra’s contractual relationships. It prohibited him from soliciting Sunterra’s customers “whose identities or product preferences became known to [him] during his employment with [Sunterra].” No evidence was presented that Salisbury had obtained information about the Swansons while so employed.

But the first cause of action must not be viewed in a vacuum. The preliminary injunction was reasonably related to the first cause of action

Thus, all causes of action were reasonably related to the preliminary injunction. All arose out of Salisbury’s brokerage activities concerning the resale of timeshare interests in the Inn, and these activities involved conduct prohibited by the preliminary injunction. Accordingly, the issuance of the preliminary injunction conclusively establishes that Sunterra’s entire action was brought with probable cause. Since the absence of probable cause is an element of a malicious prosecution action, the trial court erred in denying petitioner’s motion for judgment on the pleadings.

Disposition

Let a peremptory writ of mandate issue directing respondent court to vacate its order denying petitioner’s motion for judgment on the pleadings and to enter a new and different order granting the motion. Costs in this proceeding are awarded to petitioner.

Gilbert, P. J., and Coffee, J., concurred.

The petition of real party in interest for review by the Supreme Court was denied December 18, 2002.