Judge: Olivia Rosales, Case: 21NWCV00255, Date: 2022-10-27 Tentative Ruling

DEPARTMENT SE-C LAW & MOTION PROCEDURES ARE AS FOLLOWS: APPEARANCES: The Court will hear oral arguments on all matters at the scheduled time of hearing. If all counsel intend to submit on the Tentative Order and do not want oral argument, please advise the clerk, in Department “C”, by calling (562-345-3702). If all sides submit on the Tentative Order and the clerk is so advised, the Tentative Order will become the final order of the court and the prevailing party shall give written Notice of Ruling per CRC 3.1312. If the Moving and Responding parties do not agree to submit on the Tentative Order, the motion will be called as calendared for hearing. There is no need to contact Department “C”, as the matter will remain on calendar for hearing. If the Moving party does not call Department “C” to submit on the Tentative Order and there is no appearance by any party, then the motion(s), at the Court’s discretion, may be taken off calendar without ruling on the motion(s). ORDERS: The minute order reflecting the Court’s Order will constitute the final Order. No additional orders should be submitted to the Court for signature unless required by law or by the Court. Prevailing party shall give written Notice of Ruling per CRC 3.1312. Minute orders, which constitute the final Order of the Court, will only be sent to the parties via U.S. mail  for the following: OSC re: sanctions, OSC re: contempt or matters taken under submission after oral arguments or briefing. Counsel or parties may request copies of all other minute orders/final orders either at the clerk’s office or in writing. If a request is in writing, a self-addressed stamped envelope and the appropriate fee for copies shall be submitted.

Case Number: 21NWCV00255    Hearing Date: October 27, 2022    Dept: SEC

WEST CENTRAL PRODUCE, INC. v. CLEVER CHKN 91403, LLC

CASE NO.:  21NWCV00255

HEARING:  10/27/22

#5

TENTATIVE ORDER

Plaintiff/Cross-Defendant WEST CENTRAL PRODUCE, INC.’s Special Motion to Strike Defendant/Cross-Complainant TERRY HELLER’s First Cause of Action for Malicious Prosecution is GRANTED.

Moving Party to give Notice

Defendant/Cross-Complainant TERRY HELLER’s Request for Judicial Notice is GRANTED. (Cal. Ev. Code §452.)

This breach of contract action was filed by Plaintiff/Cross-Defendant WEST CENTRAL PRODUCE, INC. (“WCP”) on April 27, 2021. The operative Second Amended Complaint (“SAC”) alleges that Defendant/Cross-Complainant TERRY HELLER (“Heller”) signed a personal guaranty and is personally liable for the debts of his company, CLEVER CHKN 91403, LLC (“CCL”). (SAC ¶¶26-27.)  The SAC asserts the following causes of action: (1) Breach of Contract; (2) Breach of Guaranty; (3) Fraud – Intentional Misrepresentation; (4) Common Count – Account Stated; and (5) Common Count – For Unpaid Goods/Services.

On May 31, 2022, Defendant/Cross-Complainant TERRY HELLER (“Heller”) filed the subject Cross-Complaint (“XC”). The XC alleges, in pertinent part, “Heller, as President of Clever Hospitality, Inc. (the manager of [CCL], filled out the credit application on behalf of [CCL] and struck out the personal guaranty clause and wrote ‘NO PERSONAL GUARANTY’ adjacent to the marked out personal guaranty clause. HELLER… then executed the credit application form….” (XC ¶14.) “On or about August 7, 2019, WEST CENTRAL filed a lawsuit against HELLER in LACS CASE No 19VECV01138, West Central Produce, Inc. v. Terry Heller (‘the 2019 Lawsuit’).” (XC ¶20.) “The sole cause of action in the 2019 Lawsuit was for ‘Breach of Guaranty Agreement’…. [¶] In November 2019, counsel for HELLER contacted Counsel for WEST CENTRAL and informed counsel for WEST CENTRAL that HELLER had not executed a personal guaranty, and provided WEST CENTRAL’s counsel with a copy of the true and correct…Application that clearly showed the personal guaranty clause struck out and the words ‘NO PERSONAL GUARANTEE’ inserted. [¶] On or about December 4, 2019, following the aforementioned discussion and document exchange, WEST CENTRAL filed a Request for Dismissal of the 2019 Lawsuit.” (XC ¶¶21-23.) “WEST CENTRAL… attached… the Fraudulent CC 91403 Application to its Second Amended Complaint as ‘Exhibit B’, and this filing….” (XC ¶33.)

The XC asserts the following causes of action: (1) Malicious Prosecution/Abuse of Process; (2) Negligence; (3) Intentional Infliction of Emotional Distress; and (4) Negligent Infliction of Emotional Distress.

WCP now moves to strike Heller’s first cause of action for Malicious Prosecution/Abuse of Process pursuant to CCP §425.16.

In ruling on a special motion to strike, the Court engages in a two-step process. First, the Court decides whether the moving defendant/cross-defendant has made a threshold showing that the challenged claims arise from protected activity. The moving defendant/cross-defendant’s burden is to demonstrate that the act or acts of which plaintiff/cross-complainant complains were taken “in furtherance of the [defendant’s] right of petition or free speech under the United States or California Constitution in connection with a public issue” as defined by statute. If the court finds such a showing has been made, the burden then shifts to the cross-complainant, who must demonstrate a probability of prevailing on the merits. (Equillion Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 67.)

A moving party can satisfy its burden by showing: (1) statements were made before legislative, executive, or judicial proceedings, or made in connection with matters being considered in such proceedings; or (2) statements were made in a public forum, or other conduct in furtherance of the exercise of the constitutional rights of petition or free speech, in connection with issues of public interest. (CCP §425.16(e); Equillon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 66.)  A party opposing a special motion to strike meets his or her burden by making a prima facie showing of facts which would support a judgment in plaintiff’s favor. (Kyle v. Carmon (1999) 71 Cal.App.4th 901, 907.)

In order to invoke the protection of CCP §425.16, a defendant/cross-defendant need only demonstrate that a suit “arises from” defendant/cross-defendant’s exercise of free speech or petition rights. (See CCP §425.16(b).) In opposing an anti-SLAPP, a plaintiff/cross-complainant must present admissible evidence and cannot rely on the allegations of the complaint. (Roberts v. Los Angeles County Bar Association (2003) 105 Cal.App.4th 604, 613-614.)

Prong 1 – Acts in Furtherance of the Constitutional Right of Petition or Free Speech:

There is no question that the first cause of action arises from protected activity. Moreover, “[b]y definition, a malicious prosecution suit alleges that the [cross-defendant] committed a tort by filing a lawsuit.” (Jarrow Formulas, Inc. v. LaMarche (2003) 31 Cal.4th 728, 741.)  Here, the malicious prosecution claim is based solely WCP’s litigation of the Guaranty in the SAC. (See CCP § 425.16(e)(1), (2); Rusheen v. Cohen (2006) 37 Cal.4^th 1048.) Therefore, this action arises out of acts in furtherance of the right of petition or free speech. WCP has met the burden of demonstrating that the cause of action at issue arises from protected activity, and the first prong is satisfied. Consequently, the burden then shifts to Heller.

Prong 2—Probability of Prevailing on the Merits:

It is then Heller’s burden of establishing a probability of prevailing on the merits of the first claim. (CCP §425.16(b).)

To prevail on a malicious prosecution claim, Heller must show that the prior action “(1) was commenced by or at the direction of [WCP] and was pursued to a legal termination favorable to [Heller]; (2) was brought without probable cause; and (3) was initiated with malice.” (Soukup v. Law Offices of Herbert Hafif (2006) 39 Cal.4th 260, 280.)

“The requirement of favorable termination has been variously defined by the core of the concept is that termination must reflect on the merits of the prior action.” (See Warren v. Wasserman, Comden & Casselman (1990) 220 Cal.App.3d 1297, 1301.) “Favorable termination does not mean the [cross-complainant] prevailed in the prior action. For a termination to be favorable it must reflect the [cross-complainant’s] innocence of the alleged misconduct.” (See Id. at 1302.) In Oprian v. Goldrich, Kest & Associates (1990) 220 Cal.App.3d 337, the court acknowledges that a favorable termination of the prior action does not result form a voluntary dismissal entered to avoid further litigation costs. (See also Contemporary Services Corp. v. Staff Pro Inc. (2007) 152 Cal.App.4th 1043, 1056-1057.)

Here, Heller is alleging that WCP’s breach of personal guaranty allegations in the SAC, which were litigated in the 2019 19VECV01138 case between the parties, forms the basis for Heller’s malicious prosecution claim. However, Heller’s own evidence reveals that WCP voluntarily dismissed the 2019 19VECV01138 action, without prejudice. (See Heller RJN Ex. 2.) Although not argued in the Moving Papers or Reply, the 19VECV01138 action did not conclude in a “legal termination in [Heller’s] favor”—this is fatal to Heller’s malicious prosecution action.

Moreover—although (again) not argued in the Moving Papers and Reply—even if Heller was able to demonstrate legal termination in his favor, Heller still fails to present evidence demonstrating malice. “To constitute malice there must be a motive or purpose, and it must be an improper one.” (See City Prods. Corp. v. Globe Indem. Co. (1979) 88 Cal.App.3d 31, 37.) “[M]alice is present when proceedings are instituted primarily for an improper purpose. Suits with the hallmark of an improper purpose are those in which ‘… (1) the person initiating them does not believe that his claim may be held valid; (2) the proceedings are begun primarily because of hostility or ill will; (3) the proceedings are initiated solely for the purpose of depriving the person against whom they are initiated of a beneficial use of his property; (4) the proceedings are initiated for the purpose of forcing a settlement which as no relation to the merits of the claim.’ [Citation Omitted.]” (Sierra Club Foundation v. Graham (1999) 72 Cal.App.4th 1135, 1157.)

There is no evidence presented in Heller’s Opposition that shows malice, bad faith, hostility or ill will, or the lack of a sincere belief that the facts and circumstances justified WCP’s prosecution of the instant and prior action. Rather, the facts and evidence demonstrate that there appears to be a real, good-faith dispute, over the validity of the personal guaranty attached to the SAC.

The Court finds that Heller has not met the burden of demonstrating that he can prevail on the merits of his malicious prosecution claim.

As to the abuse of process portion of the first cause of action, Heller does not demonstrate a probability of prevailing. As indicated, Heller’s abuse of process allegations claim arises out of WCP’s allegations in the earlier filed 2019 action. These statements are protected under Cal. Civ. Code §47(b), the litigation privilege. “The litigation privilege is also relevant to the second step in the anti-SLAPP analysis in that it may present a substantive defense a plaintiff must overcome to demonstrate a probability of prevailing.” (Flatley v. Mauro (2006) 39 Cal.4th 299, 323.) “The litigation privilege states simply that ‘A privileged publication or broadcast is one made… [i]n any… judicial proceeding….” (Jarrow Formulas, Inc. v. LaMarche (2003) 31 Cal.4th 728, 737.) “[C]ommunications with some relation to judicial proceedings are absolutely immune from tort liability by the litigation privilege. [Cite.]” (Rusheen v. Cohen (2006) 37 Cal.4th 1048, 1057.)

The Special Motion to Strike is GRANTED as to Heller’s first cause of action.

Attorney’s Fees and Costs:

WCP is entitled to reasonable attorney’s fees. (CCP §425.16(c)(1). “[A] prevailing defendant on a special motion to strike shall be entitled to recover his or her attorney’s fees and costs. (Id.) “Any SLAPP defendant who brings a successful motion to strike is entitled to mandatory attorney fees. (Ketchum v. Moses (2001) 24 Cal.4th 1122, 1131.) However, the award of attorney fees must be reasonable. (See Robertson v. Rodriguez (1995) 36 Cal.App.4th 347, 362.) [“We readily conclude section 425.16 similarly authorizes an award of reasonable attorney fees to the prevailing party…The right of prevailing defendants to recover their reasonable attorney fees under section 425.16 adequately compensates them for the expense of responding to a baseless lawsuit.”]

WCP’s Motion seeks to recover $8,061.65 based on Attorney Taormina’s flat-fee charged for this Motion, and the filing fee of $61.65. (Taormina Decl., ¶¶6-9.). The Court has reviewed the declaration of Attorney Cosmo Taormina, which provides a summary of the time spent litigating the instant anti-SLAPP motion. Given the fact that the Court’s ruling is based mostly on arguments not raised by the Moving Party, WCP has only established an entitlement to $611.65 ($550 x 1 hr. + $61.65 costs).

Evidentiary Objections:

WCP’s Objection to Heller’s Request for Judicial Notice is OVERRULED.

WCP’s Evidentiary Objections to the Declarations of David Murphy, Randall Fink, and Marisa Simkin are OVERRULED.