Judge: Armen Tamzarian, Case: 22STCV10535, Date: 2022-10-26 Tentative Ruling

Case Number: 22STCV10535    Hearing Date: October 26, 2022    Dept: 52

3/25/22: Plaintiff Louis Mayorga filed a complaint against defendants Lisa Fancher, dba Frontier Records and American Lesion Music; Michael B. Ackerman, Esq.; and Alfred Eric Bjorgum, Esq. for malicious prosecution.

           This is the latest in a series of lawsuits.  In 2016, Mayorga sued Fancher in case No. BC643234.  Mayorga is a member of the band Suicidal Tendencies.  Lisa Fancher (doing business as Frontier Records and American Lesion Music) published the band’s self-titled album in 1983.  Mayorga sued Fancher for withholding royalties from him.  Ackerman and Bjorgum represented Fancher in the first case.  (This complaint incorrectly claims the lawyers were named defendants in the first case.)  

The parties entered a “tentative agreement” to settle the first case.  Mayorga agreed to pay $75,000 to get the master tapes and royalty rights.  He decided not to go through with it, which nullified the agreement.  Fancher moved to enforce the agreement.  The court denied the motion and found in favor of Mayorga.

(The complaint does not mention that, in 2018, Mayorga sued his former attorneys for malpractice over the circumstances of this same tentative agreement.)

Fancher, Ackerman, and Bjorgum then sued plaintiff in 2019 in case No. 19STCV28432 for: (1) breach of contract (the tentative settlement agreement); (2) breach of the covenant of good faith and fair dealing; and (3) fraud.  That lawsuit was frivolous and malicious because the court had already found there was no settlement agreement.  The court sustained Mayorga’s demurrer to the first amended complaint, and defendants dismissed the case.  The frivolous lawsuit damaged Mayorga.

Motion

(The motions by Fancher and Bjorgum make nearly identical arguments.  The Fancher and Ackerman declarations are the same on both motions.  The only different evidence is Bjorgum’s declaration in support of his motion.)

           The complaint arises from protected activity.  Suing someone or representing a client suing someone is protected activity.          

           Plaintiff cannot establish the elements of malicious prosecution: (1) the lawsuit against him terminated on the merits in his favor; (2) Bjorgum and Fancher pursued it without probable cause; or (3) Bjorgum and Fancher pursued it with malice.

           There was no favorable termination on the merits.  Voluntary dismissal for financial reasons does not qualify.  After the court sustained the demurrer to the first amended complaint, Bjorgum and Fancher had new evidence and allegations for the second amended complaint.  They voluntarily only dismissed it for financial reasons only.  Fancher had already incurred over $100,000 in fees defending Mayorga’s first lawsuit.

           There was probable cause for all three causes of action: breach of contract, breach of implied covenant of good faith, and fraud.  Mayorga tried to change the agreement’s material terms to get more time to obtain the money to pay Fancher and to require Fancher to assign the right to royalties to a third-party.  Bjorgum and Fancher discovered that Mayorga never intended to pay the $75,000 he agreed to pay and concealed that he was planning to assign the rights to Cleopatra Records—Fancher’s competitor.

There was probable cause for fraud.  Mayorga represented he would pay $75,000 by September 6, 2017.  He did not have the money and was relying on getting it from a third party.  His misrepresentation caused Fancher to incur further fees in the royalty case.  Mayorga also failed to disclose that the rights would have to be transferred to a third party instead of him. 

Bjorgum and Fancher did not act with malice.  The purpose of the second lawsuit was not to obtain late discovery in the royalty case.  They had no ill will and acted in good faith.

Opposition

(Plaintiff filed a combined opposition to both motions.)

           Plaintiff’s claims do not arise from constitutionally protected activity.  They rely on the conclusory argument that any claim of malicious prosecution arises from protected activity.  If true, that would nullify any cause of action for malicious prosecution.

           The prior action was voluntarily dismissed based on the merits.  A voluntary dismissal may be an implicit concession.  When Mayorga demurred to the initial complaint, Fancher concurrently amended it and opposed it, which made the demurrer moot.  Mayorga successfully demurred to the first amended complaint.  The court ruled, “[i]t is seemingly apparent that [Fancher] will be unable to set forth an enforceable settlement agreement on which to base her” first two causes of action.  They claim they dismissed it for financial reasons, but the context and their history of aggressive litigation shows otherwise.  They dismissed it only 12 days before the hearing set for the next demurrer.

           They had no probable cause for any of the three causes of action.  The only reason they sued was to enforce an agreement they knew or should have known was void and unenforceable.  The court found the agreement void in 2017.  They sued to enforce it almost two years later. 

           The fraud claim was based on mischaracterizing the agreement’s content.  It did not provide who would finance the $75,000.  Trying to get a third party to finance Mayorga’s payment could not constitute fraud.  The agreement also does not specify who would obtain the rights and master tapes.  It says Fancher would transfer them, but not to whom.  The agreement was explicitly premised on a further agreement regarding the transfer assignment and waiver.  Nothing required Mayorga to personally get the rights and tapes.  The further agreement did not materialize and therefore the agreement became void.   

           Mayorga’s attempts to get financing and transfer the rights to a third party were attempts to comply with his obligations, not to change material terms.  He intended to and was trying to perform. 

           Defendants brought the prior action with malice.  Lack of probable cause supports an inference of malice.  Malice does not require hostility.  Knowingly maintaining a frivolous action with indifference to the defendant.  Malice necessarily requires circumstantial evidence and questions of fact.

           Plaintiff is entitled to get his fees for this frivolous anti-SLAPP motion.  He already incurred $13,000 in fees and anticipates another $1,500 for the hearing.  Plaintiff requests only a modest $9,500 against Bjorgum and Fancher, jointly and severally.

Reply

(The two replies have minimal differences.)

           Suing someone is protected activity, as the California Supreme Court has held. 

           Mayorga fails to show evidence of each element.  He improperly relies on judicial notice of factual findings made by a court.  He did not even file a declaration in support of his opposition.  The only declaration is from his attorney about his fees.

           The action did not terminate in Mayorga’s favor.  It was voluntarily dismissed for financial reasons.  That Mayorga filed the same demurrer again did not mean we dismissed the action because of it.  The second amended complaint contains further details on how Mayorga concealed the deal with Cleopatra Records done to intentionally run out the clock on the settlement agreement.  And when Cleopatra offered to fund the settlement, he did not even respond until after the deadline. 

           Plaintiff fails to show defendants lacked probable cause.  He does not meet the difficult burden of showing no reasonable attorney would have found the Fancher action tenable.  The action was not brought to enforce the settlement agreement and was not based on what happened after the agreement expired.

           Plaintiff fails to show malice.  He has no evidence, just conjecture.  He relies on lack of probable cause as malice, which would eliminate the malice element. 

Discussion

The case turns on an odd contract provision that, if the parties did not reach a further agreement or Mayorga did not timely pay, the contract would be as if it never existed.  As the court interpreted it, this gives any party free rein to breach the contract or implied covenant with no consequences.  That seems to make the whole thing illusory.  This could be why the court wrote, “Assuming [it] was a valid settlement agreement…”  (Opp. RJN, Ex. 1, p. 3.)

The court sees no reason to get into the fraud, but  agrees with plaintiff about it.  Where he gets the money and who got the rights and tapes were collateral issues, not material terms.  As for the argument that Mayorga fraudulently concealed that he wanted to assign the rights to Cleopatra Records, Fancher’s competitor—who did they expect would get the rights other than a record label that does not belong to Fancher, i.e., a competitor?

One could reasonably conclude these motions were frivolous.

Ackerman also filed an anti-SLAPP motion set for November 9.  Despite a potential for inconsistent rulings, these two hearings should not be continued because of the 30-day hearing deadline for anti-SLAPP motions. 

The first two cases are both assigned to Judge Stuart Rice.  While covering Department 52, Judge Stern discussed the matter with Judge Rice, then ordered the parties (but not a particular party) to file a notice of related case.  No party has filed a notice of related case.

Tentative Ruling

Defendant Alfred Eric Bjorgum’s Special Motion to Strike Complaint; and Defendant Lisa Fancher’s Special Motion to Strike Complaint

Defendants Alfred Eric Bjorgum and Lisa Fancher each move to strike plaintiff Louis Mayorga’s complaint under CCP § 425.16.

Courts use a two-step process for resolving anti-SLAPP motions under CCP § 425.16: “First, the court decides whether the defendant has made a threshold showing that the challenged cause of action is one arising from protected activity.”  (Navellier v. Sletten (2002) 29 Cal.4th 82, 88 (Navellier).)  The defendant must show “the cause of action is based on the defendant’s protected free speech or petitioning activity.”  (Id. at p. 89.) 

Second, once the defendant establishes the first element, courts “must then determine whether the plaintiff has demonstrated a probability of prevailing on the claim.”  (Navellier, 29 Cal.4th at p. 88.)  “[T]he plaintiff need only have stated and substantiated a legally sufficient claim.”  (Ibid., internal quotes and citations omitted.)  “[C]laims with the requisite minimal merit may proceed.”  (Id. at p. 94.)  “Put another way, the plaintiff ‘must demonstrate that the complaint is both legally sufficient and supported by a sufficient prima facie showing of facts to sustain a favorable judgment if the evidence submitted by the plaintiff is credited.’ ”  (Wilson v. Parker, Covert & Chidester (2002) 28 Cal.4th 811, 821.)

Request for Judicial Notice

           Plaintiff requests judicial notice of seven exhibits.  All are court records subject to judicial notice under Evidence Code section 452, subdivision (d)(1).  The request is granted.  The court takes judicial notice of the existence of the exhibits, their contents, and their legal effects, but not the truth of the facts stated therein.  (See In re Vicks (2013) 56 Cal.4th 274, 314.)

           Defendants argue that plaintiff improperly relies on judicial notice of findings of fact by judges.  He does not.  As discussed below, these two motions turn largely on the court’s prior interpretation of a contract between Mayorga and Fancher.  “The interpretation of a contract is a judicial function.  [Citation.]  In engaging in this function, the trial court ‘give[s] effect to the mutual intention of the parties as it existed’ at the time the contract was executed.  [Citation.]  Ordinarily, the objective intent of the contracting parties is a legal question determined solely by reference to the contract’s terms.”  (Brown v. Goldstein (2019) 34 Cal.App.5th 418, 432.)  A judge’s interpretation of a contract is not a finding of fact. 

Summary of Facts

           Plaintiff Louis Mayorga was a member of the band Suicidal Tendencies.  (Fancher Decl., ¶ 2.)  In 1983, defendant Lisa Fancher’s record company published the band’s self-titled album.  (Ibid.)  This action is one of a series of lawsuits between Mayorga and Fancher.

In 2016, Mayorga filed the first action against Fancher alleging she withheld royalties owed to him for the Suicidal Tendencies album.  (Fancher Decl., ¶ 2.)  Defendant Alfred Eric Bjorgum joined the action as Fancher’s co-counsel in September 2017.  (Bjorgum Decl., ¶ 2.) 

On August 30, 2017, the parties attended a mandatory settlement conference.  (Fancher Decl., ¶ 3.)  The parties drafted and signed a handwritten short-form settlement agreement under which Mayorga agreed to pay Fancher $75,000 in exchange for an assignment of his rights in the album and for the physical master tapes.  (Id., ¶ 4; Ackerman Decl., ¶ 5, Ex. 2.)  The agreement includes a provision stating, “[T]o the extent that the parties fail to reach an agreement regarding transfer, assignment and waiver, and/or if payment is not made by September 6, 2017, then this stipulation shall be void and of no effect as though it never existed.”  (Ackerman Decl., ¶ 5, Ex. 2, ¶ 8, p. 2.)

The parties never consummated the settlement.  Mayorga demanded Fancher transfer her rights to the album to Cleopatra Records.  (Fancher Decl., ¶ 5.)  Fancher refused.  (Ibid.)  Mayorga did not pay the $75,000.  (Id., ¶ 6.)  On September 6, 2017, Fancher filed an ex parte application to enforce the agreement.  (Ackerman Decl., ¶ 18.)  The court denied the application but heard the matter as a noticed motion.  (Ibid.)  Fancher also moved for sanctions against Mayorga under Code of Civil Procedure sections 128.5 and 128.7.  (Opp. RJN, Ex. 1, p. 4.)

On October 11, 2017, the court denied Fancher’s motion to enforce the agreement and for sanctions.  (Opp. RJN, Ex. 1.)  The court ruled: “The conduct that Defendant Fancher argues breached the agreement—Plaintiff’s failure to turn over assignment documents or pay the $75,000 agreed to…--did not breach the agreement so much as end it.  By its own terms, the agreement provides that a failure of the parties to agree to assignment or transfer of rights, or to make payment by the September 6 deadline, shall make the stipulation ‘void and of no effect as though it never existed.’  …  The failure to perform has now voided the agreement, and as there is now, effectively, no agreement, there are no ‘terms of the settlement’ pursuant to which this court may enter judgment.”  (Id., pp. 3-4.)

On October 10, 2018, Mayorga filed an action against the attorneys who represented him for part of the first action, including the mandatory settlement conference.  (Ackerman Decl., Ex. 5.)  It alleges Mayorga’s former attorney Evan S. Cohen concealed that he also represented Cleopatra Records and tried to influence Mayorga to assign the rights to Cleopatra to benefit himself.  (Ibid.)

Fancher filed an action—the subject of this complaint for malicious prosecution—against Mayorga on August 12, 2019.  (Fancher Decl., ¶ 7.)  In it, she alleged causes of action against Mayorga for breach of contract (the settlement agreement), breach of the covenant of good faith and fair dealing, and fraud.  (Ackerman Decl., Ex. 6.)  Bjorgum and Ackerman represented Fancher in the action.  (Bjorgum Decl., ¶ 12; Ackerman Decl., ¶ 26.)  Mayorga demurred, and Fancher filed a first amended complaint before the hearing.  (Ackerman Decl., ¶ 27.)  Mayorga demurred again.  (Id., ¶ 28.)

On December 2, 2020, the court sustained Mayorga’s demurrer to the first amended complaint with leave to amend.  (Ackerman Decl., ¶ 31, Ex. 11.)  The court ruled, “[I]n accordance with the prior ruling, the Settlement Agreement expired by its own terms on September 6, 2017.”  (Id., p. 3.)  “From the pleading alone, the legal conclusion which arises is that the Settlement Agreement is not enforceable against either party, as was concluded in the court’s prior ruling.  Furthermore, Plaintiff does not articulate how any argument premised on fraudulent inducement would save an agreement which by its own terms is no longer in existence.”  (Ibid.)  The court also sustained the demurrer to the third cause of action for fraud with leave to amend.  (Id., pp. 4-5.)

Fancher filed a second amended complaint in January 2021.  (Ackerman Decl., ¶ 32.)  Mayorga demurred again.  (Id., ¶ 33.)  Fancher requested dismissal of the action without prejudice on March 26, 2021.  (Id., ¶ 34.)  

Now, plaintiff brings this action against defendants Fancher, Ackerman, and Bjorgum for malicious prosecution of the action filed against him in 2019, case No. 19STCV28432.   

I. Protected Activity

This action arises from protected activity.  Protected activity includes “any written or oral statement or writing made before a legislative, executive, or judicial proceeding, or any other official proceeding authorized by law” (CCP § 425.16(e)(1)), and “any written or oral statement or writing made in connection with an issue under consideration or review by a legislative, executive, or judicial body, or any other official proceeding authorized by law” (CCP § 425.16(e)(2)). 

Mayorga’s complaint alleges malicious prosecution against defendants for bringing and pursuing the lawsuit against him in 2019.  “[S]ection 425.16 potentially may apply to every malicious prosecution action, because every such action arises from an underlying lawsuit, or petition to the judicial branch.  By definition, a malicious prosecution suit alleges that the defendant committed a tort by filing a lawsuit.”  (Jarrow Formulas, Inc. v. LaMarche (2003) 31 Cal.4th 728, 734–735.)  Plaintiff’s opposition relies on the argument that the allowing anti-SLAPP motions for malicious prosecution would “render the cause of action a nullity” (Opp., p. 6)—which the Supreme Court of California rejected in Jarrow Formulas, Inc.

II. Probability of Prevailing

Plaintiff demonstrates a probability of prevailing on the merits on this action against Bjorgum and Fancher.  The complaint alleges a single cause of action for malicious prosecution.  “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 malice.”  (Parrish v. Latham & Watkins (2017) 3 Cal.5th 767, 775.)

(1) Favorable Termination

Plaintiff demonstrates a probability of proving the 2019 action ended in a favorable termination on the merits.  “If [the dismissal] is of such a nature as to indicate the innocence of the accused, it is a favorable termination sufficient to satisfy the requirement.  If, however, the dismissal is on technical grounds, for procedural reasons, or for any other reason not inconsistent with his guilt, it does not constitute a favorable termination.”  (Oprian v. Goldrich, Kest & Associates (1990) 220 Cal.App.3d 337, 344, internal quotes omitted.)  “ ‘A voluntary dismissal may be an implicit concession that the dismissing party cannot maintain the action and may constitute a decision on the merits.  [Citations.] ‘It is not enough, however, merely to show that the proceeding was dismissed.’  [Citation.]  The reasons for the dismissal of the action must be examined to determine whether the termination reflected on the merits.’ ”  (Robbins v. Blecher (1997) 52 Cal.App.4th 886, 893.)

Defendants voluntarily dismissed the action against Mayorga.  Fancher asserts she “chose to do so for financial reasons.  My dismissal of the Fancher Action had nothing to do with the merits of the claims.  I believed and still believe that my claims in the Fancher action were meritorious.  My dismissal of the Fancher Action was solely for financial reasons.  I could not afford to continue both lawsuits, and so because I could not stop the Royalty Action but could stop the Fancher Action, I chose to voluntarily dismiss the Fancher Action, without prejudice.”  (Fancher Decl., ¶ 8.) 

Similarly, Bjorgum states, “But for the financial burdens on Fancher, I do not believe that she would have elected to dismiss the Fancher Action.  Based on the facts that we had and the additional allegations set forth in the Second Amended Complaint, I believe that the demurrer to the Second Amended Complaint would have been overruled had Fancher elected to proceed with the Fancher Action.”  (Bjorgum Decl., ¶ 21.)

Mayorga establishes “the requisite minimal merit” to proceed.  (Navellier, supra, 29 Cal.4th at p. 94.)  Defendants rely on self-serving declarations about their subjective motivations.  But the court’s ruling sustaining the demurrer to Fancher’s first amended complaint shows it was deeply skeptical that Fancher could maintain any action against Mayorga for breach of the 2017 settlement agreement.  (Ackerman Decl., Ex. 11.)  Not only was the settlement agreement “by its own terms… no longer in existence” (id., p. 3), but that had already been decided years earlier in the first action (ibid.; Opp. RJN, Ex. 1).  The court expressed that it was being charitable in allowing leave to amend the complaint: “It is seemingly apparent that Plaintiff will be unable to set forth an enforceable settlement agreement on which to base her claim.  Nonetheless, the demurrer to the first cause of action for breach of contract and second cause of action for breach of the covenant of good faith and fair dealing is sustained with 30 days leave to amend.”  (Ackerman Decl., Ex. 11, p. 4.)

Bjorgum and Fancher argue the second amended complaint was viable because of new evidence and allegations that Mayorga repudiated the settlement agreement before the payment deadline.  (Ackerman Decl., ¶ 32.)  But, as the court ruled in both prior actions between these parties, by its own terms the agreement ceased to exist—retroactively.  Defendants again fail to articulate how Mayorga could have breached a contract that never was.  Their argument amounts to insisting that the agreement did exist until September 6, 2017.  The court already found otherwise, twice. 

Despite defendants’ claims about their subjective motivations, one can infer from the dismissal’s context that it constituted a favorable termination on the merits.  Before Fancher dismissed the action, the court’s last ruling on it sustained Mayorga’s demurrer and sharply criticized the entire basis for the action.  One could conclude that the writing on the wall showed the case was doomed and that defendants dismissed it for that reason. 

(2) Probable Cause

Plaintiff demonstrates a probability of prevailing on the second element, probable cause.  “The question of probable cause is ‘whether as an objective matter, the prior action was legally tenable or not.’ ”  (Soukup v. Law Offices of Herbert Hafif (2006) 39 Cal.4th 260, 292.)  “ ‘A litigant will lack probable cause for his action … if he seeks recovery upon a legal theory which is untenable under the facts known to him.’ ” … Probable cause, moreover, must exist for every cause of action advanced in the underlying action.”  (Ibid.)

For the reasons discussed above, plaintiff shows he may prevail in showing there was no probable cause for Fancher’s first and second causes of action for breach of contract and breach of the implied covenant of good faith and fair dealing.  Two years before she filed the action, the court had found no contract ever existed.  Both Bjorgum and Fancher knew that.  Without the contract, there can be no cause of action for breaching it.  Regardless, they sued him for breaching a nonexistent contract.

(3) Malice

Plaintiff demonstrates a sufficient probability of proving defendants acted maliciously.  “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 … the defendant's motivation is a question of fact to be determined by the jury.”  (Sheldon Appel Co. v. Albert & Oliker (1989) 47 Cal.3d 863, 874.)  “[A] plaintiff acts with malice when he asserts a claim with knowledge of its falsity, because one who seeks to establish such a claim ‘can only be motivated by an improper purpose.’  [Citation.]  A  lack of probable cause will therefore support an inference of malice.”  (Drummond v. Desmarais (2009) 176 Cal.App.4th 439, 452.)

           Defendants Fancher and Bjorgum state they did not act maliciously.  A jury could, however, infer malice based on the context of Fancher’s action.  Fancher and Bjorgum filed a suit for breaching a contract a court had determined—two years earlier—had never existed.  They had long known the key fact that undermined the action’s entire foundation.  Fancher and Bjorgum still filed it.  After the court sustained the demurrer to the first amended complaint for this very reason, they continued to pursue the action by filing a second amended complaint. 

III. Plaintiff’s Attorney Fees

In his opposition, plaintiff moves for an award of $9,500 in attorney fees.  “If the court finds that a special motion to strike is frivolous or is solely intended to cause unnecessary delay, the court shall award costs and reasonable attorney’s fees to a plaintiff prevailing on the motion, pursuant to Section 128.5.”  (CCP § 425.16(c)(1).)  Though defendants Fancher’s and Bjorgum’s special motions to strike were unsuccessful, the court finds they were not frivolous or solely intended to cause unnecessary delay.

IV. Disposition

Defendant Lisa Fancher’s special motion to strike plaintiff Louis Mayorga’s complaint is denied.

Defendant Alfred Eric Bjorgum’s special motion to strike plaintiff Louis Mayorga’s complaint is denied.