Judge: H. Jay Ford, III, Case: 21SMCV01778, Date: 2022-10-06 Tentative Ruling

Case Number: 21SMCV01778    Hearing Date: October 6, 2022    Dept: O

  Case Name:  Cook, et al. v. Zohar, et al.

SUBJECT:                SLAPP MOTION

MOVING PARTY:   Defendants Daniel Y. Zohar and Zohar Law Firm

RESP. PARTY:         Plaintiffs A.J. Cook and Scattered Joy Productions, Inc.

TENTATIVE RULING

            Defendants Daniel Y. Zohar and Zohar Law Firm’s anti-SLAPP Motion is GRANTED.

            Plaintiffs’ Objections to Zohar Declaration are (1) SUSTAINED as to Objections 9-14 and (2) OVERRULED as to Objections 1-8, 14-28. 

            Defendants’ Objections to Cook Declaration are (1) SUSTAINED as to Objections 1-3, 4 as to “Specifically, Guillod told me…in those capacities,” 5 as to “Specifically, Guillod again told me…in those capacities,” 12-43 and (2) OVERRULED as to Objections 6-11.

            Defendants’ Objections to Turnauer Declaration are (1) SUSTAINED as to Objections 44, 45 and OVERRULED as to Objections 46-48.

            Defendants’ Objections to Saltz Declaration are (1) SUSTAINED as to Objections 50-51, 53-64 and (2) OVERRULED as to Objections 49, 52. 

I.  1^st Step

            Litigation of an anti-SLAPP motion involves a two-step process. First, “the moving defendant bears the burden of establishing that the challenged allegations or claims ‘aris[e] from’ protected activity in which the defendant has engaged.” (Park, supra, 2 Cal.5th at p. 1061, 217 Cal.Rptr.3d 130, 393 P.3d 905.) Second, for each claim that does arise from protected activity, the plaintiff must show the claim has “at least ‘minimal merit.’ ” (Ibid.) If the plaintiff cannot make this showing, the court will strike the claim. Bonni v. St. Joseph Health System (2021) 11 Cal.5th 995, 1009. 

            All parties agree that this action is subject to SLAPP.  The only claim alleged is for malicious prosecution, which is undisputedly based on protected conduct under CCP §425.16(e)(1).  Jarrow Formulas, Inc. v. LaMarche (2003) 31 Cal.4th 728, 735; see also Rusheen v. Cohen (2006) 37 C4th 1048, 1063 (abuse of process claims automatically subject to SLAPP).                                  

II.  2^nd Step

Once defendant demonstrates that a cause of action arises from protected conduct, 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.  See Navellier v. Sletten (2002) 29 Cal.4th 82, 88-89.  “Precisely because the statute (1) permits early intervention in lawsuits alleging unmeritorious causes of action that implicate free speech concerns, and (2) limits opportunity to conduct discovery, the plaintiff's burden of establishing a probability of prevailing is not high: We do not weigh credibility, nor do we evaluate the weight of the evidence. Instead, we accept as true all evidence favorable to the plaintiff and assess the defendant's evidence only to determine if it defeats the plaintiff's submission as a matter of law.  Only a cause of action that lacks ‘even minimal merit' constitutes SLAPP.”  See Overstock.com, Inc. v. Gradient Analytics, Inc. (2007) 151 Cal.App.4th 688, 699.

“The second prong of the statute deals with whether the plaintiff has “demonstrated a probability of prevailing on the claim.  Under section 425.16, subdivision (b)(2), the superior court, in making these determinations, considers ‘the pleadings, and supporting and opposing affidavits stating the facts upon which the liability or defense is based.’ For purposes of an anti-SLAPP motion, the court considers the pleadings and evidence submitted by both sides, but does not weigh credibility or compare the weight of the evidence. Rather, the court's responsibility is to accept as true the evidence favorable to the plaintiff.  A plaintiff need only establish that his or her claim has minimal merit to avoid being stricken as a SLAPP.  With these descriptions in mind, we will not strike a cause of action under the anti-SLAPP statute unless it lacks even minimal merit.”  Ralphs Grocery Co. v. Victory Consultants, Inc. (2017) 17 Cal.App.5th 245, 261.

The “probability of prevailing” is tested by the same standard governing a motion for summary judgment, nonsuit, or directed verdict.  Thus, in opposing a SLAPP motion, it is plaintiff's burden to make a prima facie showing of facts that would support a judgment in plaintiff's favor.” Taus v. Loftus (2007) 40 Cal.4th 683, 714 (a “summary-judgment-like procedure”). 

            “To establish a cause of action for malicious prosecution, a plaintiff must demonstrate that the prior action (1) was initiated by or at the direction of the defendant and legally terminated in the plaintiff's favor, (2) was brought without probable cause, and (3) was initiated with malice.”  Siebel v. Mittlesteadt (2007) 41 Cal.4th 735, 740. 

            “In order to maintain an action for malicious prosecution, the plaintiff must first demonstrate that there was a favorable termination of the underlying litigation.  This requirement is an essential element of the tort of malicious prosecution, and it is strictly enforced.  Where the underlying litigation ends by way of a negotiated settlement, there is no favorable termination for the purposes of pursuing a malicious prosecution action.”  Ferreira v. Gray, Cary, Ware & Freidenrich (2001) 87 Cal.App.4th 409, 412–413 (post-judgment settlement that amended judgment precluded a finding of a favorable termination in malicious prosecution plaintiff’s favor; “the litigation ended with a settlement” and despite original judgment in plaintiff’s favor, “the litigation terminated as a result of a negotiated settlement in which both sides gave up something of value to resolve the matter”).  “Dismissal based on settlement of the underlying action generally does not reflect on the merits.”  5 Witkin, Summary (11^th ed. 2017), Torts §590.

            An exception to this general rule was recognized in Siebel.  See Siebel, supra, 41 Cal.4^th at 737.  Like Ferreira, Siebel involved a postjudgment settlement in the underlying action.  Id. at 739.  The Supreme Court addressed whether the postjudgment settlement precluded a finding of favorable termination in the malicious prosecution plaintiff’s favor.  Id. at 737.

            Based on the specific facts before it, the Supreme Court found there was a favorable termination in the malicious prosecution plaintiff’s favor the underlying action.  Id. at 737. The Supreme Court reasoned (1) a judgment in favor of the CEO/malicious prosecution plaintiff was entered after a full jury trial; and (2) the post-judgment settlement left that judgment undisturbed.  Id.at “[A] postjudgment settlement constitutes a favorable termination when the malicious prosecution plaintiff received a favorable judgment in the underlying action, and settled without giving up any portion of the judgment in his favor.”  Id. 

            The Supreme Court’s reasoning focused on the parties’ express agreement in the settlement that the settlement would not modify the final termination of the underlying action in the malicious prosecution plaintiff’s favor.  Id. at 741.  Agreeing with the Court of Appeals reasoning, the Supreme Court distinguished Ferreira, because the settling parties in Siebel “did not stipulate to a new judgment but agreed instead to dismiss their appeals and allow the existing judgment to become final.”  Id. at 741-742. 

            The Supreme Court rejected a “blanket rule” precluding a finding of favorable termination whenever a case is resolved by agreement.  “A blanket rule could also bar legitimate malicious prosecution actions.”  Id. at 742. 

            However, the Supreme Court reaffirmed existing case law holding that a dismissal based on a pretrial settlement generally does not qualify as a favorable termination, distinguishing the case before it on grounds that a judgment on the merits had actually been entered.  “A pretrial settlement obviates an adjudicated judgment on the merits.  Thus, generally there is no favorable termination, because there is nothing to reflect the malicious prosecution plaintiff’s innocence on the merits.  Our case is limited to a postjudgment settlement by the parties that does not fundamentally change the parties’ relationship established by the underlying judgment on the merits.”  Siebel, supra, 41 Cal.4^th at 744.

            The Underlying Action against Plaintiffs terminated when PWE voluntarily dismissed the PWE Action pursuant to its settlement with Plaintiffs.  Plaintiffs ask that the Court depart from the general rule that dismissals pursuant to a negotiated settlement do not qualify as a favorable termination for purposes of malicious prosecution.  Based on the reasoning of Siebel, Plaintiffs ask that the Court the Court evaluate whether the dismissal pursuant to settlement reflected Plaintiffs’ innocence.

            The Court declines to expand Siebel beyond the specific facts that were before the Supreme Court.  While the Supreme Court stated that there was no blanket rule precluding a finding of favorable termination where the underlying action terminated pursuant to a negotiated settlement, the Supreme Court affirmed the general rule that a negotiated pretrial settlement does not reflect the plaintiff’s innocence. 

            Here, there was no judgment entered after a jury verdict.  The settlement was entered into before trial.  There was never a formal adjudication of Plaintiffs’ innocence, unlike the plaintiff in Siebel.

            In addition, the settlement agreement itself contains typical preamble language, including denials of wrongdoing and a recitation of the parties’ reasons for settling.  See Plaintiffs’ Appendix of Exhibits, Exhibit X11 (under seal), p. 1.  Nowhere in the Settlement Agreement does PWE concede that Plaintiffs are entirely innocent, that PWE’s claims were entirely devoid of merit or that a judgment in favor of Siebel was inevitable.  In fact, the Settlement Agreement contains a standard “Nonadmission of Liability” clause.  Id. at p. 7, ¶11.  The Settlement Agreement was also a negotiated, pre-trial settlement wherein both parties relinquished valuable rights in exchange for settlement and resolution of the Underlying Action.  Id. at pp. 2-5, ¶¶2-8. 

            Based on the evidence, PWE’s voluntary dismissal was the result of a typical, negotiated pretrial settlement. The general rule precluding a finding of favorable termination applies to dismissals pursuant to such settlements. 

            Finally, the declaration of Brian Turnauer, successor counsel to Zohar, does not change the Court’s analysis.  Turanauer testifies that after he reviewed the file, he concluded that the Labor Commissioner would “more likely than not, make a determination that Guillod—and by extension PWE—violated the California Talent Agencies Act, and that PWE’s claims in the Underlying Action against Plaintiffs would therefore be barred as a matter of law.”  See Dec. of B. Turnauer, ¶7.  Based on Turnauer’s determination that it was more likely than not that Plaintiffs would prevail against Guillod in the Labor Commission Action, PWE agreed to settle the Underlying Action and filed a dismissal per the Settlement Agreement on 9-21-21.  Id. at ¶¶8-9.

            Turnauer’s testimony does not state that PWE settled the PWE Action because its claims were entirely meritless or that a judgment against PWE was inevitable.  Turnauer testifies Plaintiffs had a probability of prevailing against Guillod in the Labor Commission Action, which would bar the PWE action as a matter of law.  At best, Turnauer’s testimony contradicts the Settlement Agreement’s recitals and non-liability provision.   His testimony does not establish that the settlement and dismissal unambiguously and unquestionably affirmed Plaintiffs’ lack of liability.  If anything, when read with the Settlement Agreement’s recitals and non-liability provision, Turnauer’s testimony creates greater ambiguity regarding whether the Settlement Agreement and dismissal is indicative of Plaintiffs’ lack of liability. 

            Plaintiffs fail to establish with admissible evidence that they obtained a favorable termination of the PWE Action.  The undisputed evidence establishes that PWE’s dismissal of the PWE action was pursuant to a negotiated, pre-trial settlement whereby all parties exchanged things of value for purposes of settlement.  Plaintiffs’ fail to satisfy their burden on the 2^nd step of SLAPP.  Defendants’ SLAPP Motion is GRANTED.