The SUPERIOR COURT of RIVERSIDE COUNTY, Respondent.
CITY OF BARSTOW, et al., Real Parties in Interest.
37 Cal.App.4th 8
Court of Appeal, Fourth District, Division 2, California.
July 26, 1995.
Review Denied Nov. 22, 1995.
City brought action against developer of discount mall which would compete with discount mall city hoped to attract, alleging interference with contractual relations, interference with prospective economic advantage, and unfair competition. The Superior Court, Riverside County, denied developer's motion to strike under statute providing for special motions to strike causes of action arising from acts of defendant in furtherance of right of petition or free speech under Federal Constitution in connection with public issue. Developer petitioned for writ of mandate. The Court of Appeal, Richli, J., held that: (1) statute providing for special motion to strike was applicable, and (2) city failed to show probability that it would prevail against developer, as required under statute providing for motion to strike.
Brian J. Simpson, San Bernardino, Everett L. Skillman, and Clive J. Kemp of Cummings & Kemp, Santa Ana, for petitioner.
No appearance, for respondent.
Latham & Watkins, Dorn G. Bishop, Christopher Garrett, San Diego, Smith, Silbar, Duffy & Parker and Keith M. Parker, Irvine, for real parties in interest.
RICHLI, Associate Justice.
Petitioner Glen Ludwig, defendant in the action below, seeks a writ
of mandate to compel the trial court to grant his special motion to strike
under Code of Civil Procedure section 425.16. We conclude that real party
the City of Barstow, plaintiff below, has failed to show a "probability"
of success on the merits within the scope of the statute, and that the
trial court therefore erred in denying Ludwig's motion. We will grant the
FN1 All subsequent undifferentiated statutory references are to the Code of Civil Procedure.
In a nutshell, petitioner Ludwig wishes, or has wished, to develop a
discount mall in or near the Cities of Hesperia or Adelanto, and has taken
at least preliminary steps to do so. Barstow, in turn, hoped to attract
a discount mall of its own. Due to the geographic proximity of the locations,
and their situation along the same transportation corridor, it would be
economically advantageous for either mall not to face competition from
the other. As a result, Ludwig, who apparently had the initial edge, was
naturally concerned when the prospect of a competing mall in Barstow arose.
As a result, Ludwig took certain actions which became the subject of this
FN3 Ludwig has conceded that he encouraged the activities of Keating, Krier, Hendrix, and Sweet, as discussed below. Whether his motives were altruistically environmental, or selfishly financial, is in the end irrelevant to our analysis. We will assume, for the purposes of this opinion, that Ludwig was concerned for the viability of his own project.
After a developer (Tanger Properties) had conditionally agreed to purchase property in Barstow for the development of a mall, one Clyde Sweet appeared at a public City Council meeting and opposed the Tanger project. Thomas Keating then filed a lawsuit challenging the project, which the complaint characterizes as "meritless." When Barstow attempted to take Ludwig's deposition in this action, Ludwig "sought to block the depositions" and subsequently failed to appear as allegedly promised. Ludwig was otherwise uncooperative with Barstow's efforts to ascertain whether he was "behind" the litigation.
Keating and Barstow then settled the litigation.
Wayne Hendrix then appeared at another public meeting and requested that additional hearings be held on the Tanger project.
Sheree Krier then filed an action under the California Environmental Quality Act (CEQA) challenging Barstow's adoption of a negative declaration for the Tanger project. Krier later dismissed the action in return for the payment by Barstow of at least $75,000; Barstow, as part of the settlement, asserted that Krier's claims had no merit and had been brought for harassment purposes.
The record as later developed indicates that the Keating lawsuit was dismissed with a mutual cost waiver. Barstow also agreed to recirculate the negative declaration previously prepared, and in return Keating agreed not to further oppose the Tanger project. Barstow also promised that it would not proceed with its "Reimbursement Agreement" with Tanger until "environmental analysis ... has been completed."
The Krier settlement obligated Barstow to prepare an "updated Master Environmental Assessment" at a cost of at least $35,000 ($15,000 payable to a named "environmental attorney" who happened to be Krier's attorney), to create an "environmental advocacy fund" with a contribution of at least $30,000, evidently to go primarily to Krier or her attorney, and to pay her attorney's fees of $10,000.
Barstow's position was that the Krier settlement was prompted by the
imminency of a crucial deadline with Tanger Properties; that is, if the
Krier litigation was not settled, Tanger would withdraw. Barstow "allowed"
Keating to voluntarily dismiss his action in order to avoid the costs and
delays which would have been involved in seeking a formal dismissal, which
it could have done if Ludwig (and certain of his agents) refused to appear
for depositions once the trial court had denied their motions for protective
FN4 It is, of course, far from obvious that the trial court would have dismissed Keating's lawsuit because Ludwig et al. failed to appear for their depositions. Whether Ludwig was "behind" the litigation had no relevance to its merits.
The trial court denied the motion, apparently on the ground that the
litigation promised good sport.
FN5 Just prior to taking the case under submission, the court remarked "You know, when two groups of people come in and they're both so convinced, so righteous in their position, you hate to take those cases away from the jury, because they so enjoy determining which side that's so righteous is really correct."
Ludwig's motion to strike, and Barstow's opposition, generated a large
amount of paperwork. Our acceptance of the propositions that Ludwig was
behind the opposition to the Tanger project and that his opposition was
based on self- interest makes it unnecessary to detail the evidence adduced
any farther than we have done.
FN6 It is therefore unnecessary for us to rule on the propriety of BARSTOW's request that we take judicial notice of statements made by another Ludwig ally, Robert Hammock, at a deposition which followed the hearing on this motion. It may be seriously doubted whether this court could judicially notice Hammock's statements for their truth. (See Sosinsky v. Grant (1992) 6 Cal.App.4th 1548, 1564, 8 Cal.Rptr.2d 552 and cases cited.) We might accept it as "new evidence" under Code of Civil Procedure section 909 and California Rules of Court, rule 23-- authorities not cited by BARSTOW. However, the matter is moot because we accept that Hammock did act at Ludwig's behest and for private purposes.
We turn first to the statute on which Ludwig relied.
Code of Civil Procedure section 425.16 was enacted to serve a specific purpose, which, happily if unusually, the Legislature explicitly set forth in subdivision (a): "... there has been a disturbing increase in lawsuits brought primarily to chill the valid exercise of the constitutional rights of freedom of speech and petition for the redress of grievances. The Legislature finds and declares that it is in the public interest to encourage continued participation in matters of public significance, and that this participation should not be chilled through abuse of the judicial process." Accordingly, any "cause of action against a person arising from any act of that person in furtherance of the person's right of petition or free speech under the United States Constitution in connection with a public issue shall be subject to a special motion to strike...." (Subd. (b).) If the statute applies, the plaintiff must establish, through the pleadings or affidavits, a "probability" that it will prevail. The special motion to strike is to be filed within 60 days of the service of the complaint, or later in the court's discretion. (Subd. (f).)
The history behind the enactment of section 425.16 has been explained
in Wilcox v. Superior Court (1994) 27 Cal.App.4th 809, 815-819, 33 Cal.Rptr.2d
446, and we need not repeat the explication in its particulars. The
statute was a response to the pervasive use of "SLAPP suits" to discourage
citizens from seeking governmental action. As noted in Wilcox, the "paradigm"
SLAPP suit is an action filed by a land developer against environmental
activists or objecting neighbors of the proposed development. However,
as the court noted, "SLAPP's ... are by no means limited to environmental
issues ... nor are the defendants necessarily local organizations with
limited resources." (27 Cal.App.4th at p. 815, 33 Cal.Rptr.2d 446.) The
statute is appropriately applied to litigation involving conduct by a defendant
which was directed to obtaining a financial advantage. Thus, in Wilcox,
section 425.16 was applied to a dispute between groups of court reporters,
in which the cross-complainant alleged that cross- defendants were supporting
and encouraging litigation charging the cross- complainants with unfair
FN7 "Strategic Lawsuits [or Litigation] Against Public Participation."
Assuming, then, that section 425.16 applies, Barstow had the burden of establishing a "probability" of success on the merits. (Wilcox, at p. 820, 33 Cal.Rptr.2d 446.) In College Hospital, Inc. v. Superior Court (1994) 8 Cal.4th 704, 34 Cal.Rptr.2d 898, 882 P.2d 894, the Supreme Court considered section 425.13, which, somewhat analogously to section 425.16, limits the seeking of punitive damages against health care providers by requiring the plaintiff to establish a "substantial probability" of prevailing on the claim for punitive damages before such a claim may be made. The court rejected the argument that the trial court, in ruling on such a request, should weigh the evidence in making its assessment of the claim. Such an approach, the court noted, would implicate the plaintiff's right to trial by jury. (8 Cal.4th at p. 719, 34 Cal.Rptr.2d 898, 882 P.2d 894.) Instead, the court held that the motion for leave to seek damages should be denied if the evidence introduced "either negates or fails to reveal the actual existence of a triable claim ... This test is largely consistent with the 'prima facie' approach formulated by the Courts of Appeal." The court also pointed out that this showing must be made by "competent admissible evidence within the personal knowledge of the declarant," with reference to the familiar standard applied to evidentiary showings in summary judgment motions. (§ 437c, subds. (b) and (d).)
College Hospital is of particular significance because the court noted in passing a number of other statutes which set up procedural hurdles impeding the assertion of particular claims. (E.g. Civ.Code, § 1714.10, subd. (a) requiring a plaintiff to show a "reasonable probability" of success in a conspiracy claim against an attorney; Code Civ. Proc., § 425.14, requiring a plaintiff to "substantiate" a claim for punitive damages against a religious organization.) The Supreme court found it "unlikely that each subtle difference in phraseology was intended to establish a completely different legal standard." (Id. at p. 716, 34 Cal.Rptr.2d 898, 882 P.2d 894.) As one of the statutes cited was section 425.16, we must construe it in accordance with the Supreme Court's analysis.
Barstow complains that the standard is too high in the context of section 425.16, which requires the defendant to make the motion to strike within 60 days of service of the complaint, and which therefore brings the question before the court at a time when the plaintiff will have had a limited opportunity to conduct discovery. (Cf. § 425.13, construed in College Hospital, which can allow up to two years for the plaintiff to seek leave to add a claim for punitive damages.) We recognize the concern, but we do not find it sufficiently compelling to justify a departure from the general standard of College Hospital. We note that the court in Wilcox v. Superior Court, supra, had concluded that section 425.16 imposed a "prima facie" standard before College Hospital was decided, holding that such a burden was appropriately moderate and was "compatible with the early stage at which the motion is brought and heard ... and the limited opportunity to conduct discovery [citation omitted]." (27 Cal.App.4th at p. 823, 33 Cal.Rptr.2d 446.) Wilcox therefore answers Barstow's objection. We agree, and we also believe that an overly-lenient standard would be wholly inappropriate, given that the statute is intended to "provid[e] a fast and inexpensive unmasking and dismissal of SLAPP's." (Ibid.) Obviously, the purpose of the statute would be frustrated if the plaintiff could drag on proceedings for many months by claiming a need to conduct additional investigation. The legislative intent is best served by an interpretation which would require a plaintiff to marshal facts sufficient to show the viability of the action before filing a SLAPP suit.
To this point, we have assumed, from the general nature of the case, that Ludwig is entitled to claim the protection of section 425.16. At first glance, the case appears entirely appropriate for the application of the statute. However, Barstow makes strongly-urged arguments to the contrary. We find them without merit.
Barstow's first argument, or first class of arguments, is that Ludwig cannot claim any protection because Ludwig did not, personally, perform any of the challenged acts. Barstow points out that it is not suing Keating, Krier, Hendrix, or Sweet, and therefore is not attacking their exercise of any protected right. This point is not germane.
The right to petition the government, or to seek legal redress, does
not confer legal protection solely on those persons formally addressing
the governmental agency or formally filing a lawsuit. In Pacific Gas
& Electric Co. v. Bear Stearns & Co. (1990) 50 Cal.3d 1118, 1135-1136,
270 Cal.Rptr. 1, 791 P.2d 587, the court relied upon the vital need
to prevent chilling the exercise of these rights in holding that no cause
of action for interference with contract or prospective advantage would
lie against a defendant who induced the actual contracting party to file
a lawsuit seeking to have the contract declared void. The court sensibly
pointed out that "we have no public policy against the funding of litigation
by outsiders ... If any person who induced another to bring a lawsuit involving
a colorable claim could be liable in tort, free access to the courts could
be choked off with an assiduous search for unnamed parties." (Ibid.) Significantly,
it referred to a case of classic environmental litigation (Sierra Club
v. Butz (N.D.Cal.1972) 349 F.Supp. 934) to demonstrate the folly and
impropriety of allowing suits against persons supporting litigation through
FN9 We discuss the parameters of this protection below.
FN10 The Ninth Circuit has also implicitly reached the same conclusion in a case factually very similar to this one. In Liberty Lake Investments v. Magnuson (9th Cir.1993) 12 F.3d 155, 158-159, the court bluntly rejected any effort to deprive the defendant of constitutional protections because he had instigated and funded anti-development, environmentally-based litigation brought by others. Although the court's primary discussion is based upon the plaintiff's inability to prove that the underlying litigation had been baseless and the irrelevance of the defendant's motivation (see below), it clearly found the fact that the defendant did not personally file the underlying action to be immaterial to its analysis.
It is well-established that a statute open to more than one construction should be construed so as to avoid anomalous or absurd results. (In re Eric J. (1979) 25 Cal.3d 522, 537, 159 Cal.Rptr. 317, 601 P.2d 549.) We assume the same principle applies to the Constitution. A person can exercise his own rights by supporting the forceful activities of others; it would be absurd to hold that the confident opponent who takes the public podium is protected, while the shy opponent who prefers to lend moral support by standing silently in the audience is not.
In this case, Barstow's whole case against Ludwig depends on the fact that he instigated the Keating and Krier lawsuits, and encouraged Hendrix and Sweet to speak against the Tanger project. We see no meaningful difference between a person who supports and encourages the filing of a lawsuit, and one who supports and encourages a third party to speak out publicly on a matter of public interest. Pacific Gas & Electric is dispositive on the issue. Its holding applies equally to the lawsuits and the public hearings, because "the right of access to the courts is indeed but one aspect of the right of petition." (California Motor Transport v. Trucking Unlimited (1972) 404 U.S. 508, 510, 92 S.Ct. 609, 612, 30 L.Ed.2d 642.) As a threshold matter, Barstow is seeking to hold Ludwig liable for the exercise of a right protected by section 425.16.
Barstow also insists that Ludwig cannot seek shelter under section 425.16 because that statute only protects communicative conduct, and Barstow asserts that it is seeking to hold Ludwig liable for noncommunicative conduct. Barstow is wrong.
Barstow relies heavily on Kimmel v. Goland (1990) 51 Cal.3d 202,
271 Cal.Rptr. 191, 793 P.2d 524--a case which we find remarkably inapposite.
Kimmel involved a dispute between mobilehome park tenants and the park
owners, a dispute which threatened to lead to litigation. In anticipation
of the lawsuit, three of the tenants surreptitiously tape recorded conversations
with park management personnel without the latter's consent. When management
learned of the existence of the tapes, it filed a cross- complaint seeking
damages for the illegal recording. (Pen.Code, §§ 632, 637.2.)
The tenants, as cross-defendants, moved for judgment on the pleadings on
the basis of the litigation privilege codified in Civil Code section 47(2),
and the trial court granted the motion.
FN11 Now section 47, subdivision (b).
FN12 As then effective, Penal Code section 637.2 provided for a minimum award of damages of $3000, with a potential for a greater award if the plaintiff could show actual damages. Of course, as Kimmel makes clear, the "actual damages" could not include damages resulting from the publication of the recorded material in the lawsuit.
To begin with, Civil Code section 47 expressly applies its privilege
only to a "publication or broadcast" made in specified circumstances, which
include, under subdivision (b), judicial, legislative, and other official
proceedings. Code of Civil Procedure section 425.16 is not so limited;
it extends to "any act ... in furtherance of ... the ... right to petition
..." (Emphasis added.) The constitutional right to petition, as we have
seen, includes the basic act of filing litigation or otherwise seeking
administrative action. (California Motor Transport Co. v. Trucking Unlimited,
supra, 404 U.S. 508, 92 S.Ct. 609, 30 L.Ed.2d 642.) It is respect for
this right, and the free access to the courts which is encompassed therein,
that has led our Supreme Court to refuse to permit a lawsuit for abuse
of process to be based solely on the improperly-motivated filing of a lawsuit.
(Oren Royal Oaks Venture v. Greenberg, Bernhard, Weiss & Karma,
Inc. (1986) 42 Cal.3d 1157, 1170, 232 Cal.Rptr. 567, 728 P.2d 1202, noted
in Pacific Gas & Electric, supra, 50 Cal.3d at p. 1133, 270 Cal.Rptr.
1, 791 P.2d 587.)
FN13 In Pacific Gas & Electric v. Bear Stearns & Co., supra, 50 Cal.3d at p. 1132, fn. 12, 270 Cal.Rptr. 1, 791 P.2d 587, the court noted that the privilege of Civil Code section 47 would not protect all of the conduct alleged in that case. Although it might protect an "exhortation to sue," it would not, on its face, protect financing litigation. The contrasting language in Code of Civil Procedure section 425.16 is thus illuminating.
Barstow contends strenuously that Ludwig's activities in recruiting and encouraging his agents are "noncommunicative." We are at a loss to imagine how Ludwig accomplished the recruiting and encouragement without communication. (See Rubin v. Green (1993) 4 Cal.4th 1187, 1195-1196, 17 Cal.Rptr.2d 828, 847 P.2d 1044 [holding that misrepresentations in the course of alleged attorney solicitation were "communicative in their essential ature," limiting Kimmel].) We must assume that he asked Keating, Krier, Hendrix and Sweet to take certain actions on his behalf. This required a communication. Further communicative conduct was then committed by the agents in speaking, writing, and making allegations in legal documents.
Barstow's attempt to rely upon Ludwig's failure to reveal his role in
the lawsuits and his refusal to comply with discovery requests is of no
assistance. Even if Ludwig's secrecy was "wrongful" under some principle
of law--which we do not find--it is clear from Barstow's evidence that
Barstow was at the very least highly suspicious that Ludwig was behind
the opposition to the Tanger project virtually from the beginning. Ludwig's
efforts to conceal his role were entirely unsuccessful and can have had
no real effect. His failure to perform discovery obligations was subject
to a speedy remedy in the court actions themselves, and, as a matter of
policy, no separate tort claim can be stated for any such failure. (See
Lossing v. Superior Court (1989) 207 Cal.App.3d 635, 639, 255 Cal.Rptr.
18 [defendant's conduct in seeking a discovery sanction in one lawsuit
could not be the basis for a separate malicious prosecution action, with
strong policy statement]; Silver v. Gold (1989) 211 Cal.App.3d 17, 23-24,
259 Cal.Rptr. 185 [unsuccessful motion to disqualify counsel in the
main action cannot be the basis for a separate malicious prosecution suit].)
FN14 For example, Clyde Sweet admitted to Barstow's city attorney that he was working for Ludwig after Sweet spoke at the public meeting on January 10, 1994--the first opposition voiced by any of Ludwig's agents. In February, 1994, after attorney Cynthia Ludvigsen made a request for information on the project, her purported client, Robert Hammock, admitted to Barstow's City Manager that he was being prompted by Ludwig. The attorney for Sheree Krier virtually admitted that Ludwig was behind her lawsuit before it was filed.
We first deal with the actions of Sweet and Hendrix. To recap, Sweet
appeared at a Barstow City Council meeting on January 10, 1994, and "opposed"
the Tanger project. As best one can tell, this opposition was based on
environmental factors. Hendrix appeared on May 16, 1994, "requesting additional
public hearings." He apparently also raised traffic and drainage concerns.
Hendrix also wrote to Barstow requesting a copy of final plans and the
drainage study. It is alleged by Barstow that these acts were done with
bad motives, inspired in turn by Ludwig's bad motives.
FN15 The declaration of Christopher Garrett consistently indicates that Hendrix merely spoke in a neutral manner, and in fact that he stated he was not opposed to the project but merely wanted more information.
Section 425.16 sets out a mere rule of procedure, but it is founded
in constitutional doctrine. "Those who petition the government are generally
immune from ... liability." (Real Estate Investors v. Columbia Pictures
(1993) 508 U.S. 49, ----, 113 S.Ct. 1920, 1926, 123 L.Ed.2d 611.) The
principle is often referred to as the "Noerr-Pennington " doctrine and,
as the recent decision in Real Estate Investors demonstrates, retains full
vitality. The principle unquestionably applies to commercial speech and
competitive activity--even anticompetitive activity. (Pennington, supra,
381 U.S. at p. 670, 85 S.Ct. at p. 1593.)
FN17 The omitted word in the text is "antitrust." However, the principle applies to virtually any tort, including unfair competition and interference with contract. (See Hi-Top Steel Corp. v. Lehrer (1994) 24 Cal.App.4th 570, 577-578, 29 Cal.Rptr.2d 646 and cases cited.) Obviously, " 'the principle of constitutional law that bars litigation arising from injuries received as a consequence of First Amendment petitioning activity [should be applied], regardless of the underlying cause of action asserted by the plaintiffs.' [Citation omitted.] 'To hold otherwise would effectively chill the defendants' First Amendment rights.' [Citation omitted.]" (Ibid.) We discuss one arguably relevant exception later.
FN18 Eastern R. Presidents Conference v. Noerr Motor Freight, Inc. (1961) 365 U.S. 127, 81 S.Ct. 523, 5 L.Ed.2d 464; Mine Workers v. Pennington (1965) 381 U.S. 657, 85 S.Ct. 1585, 14 L.Ed.2d 626.
The Noerr-Pennington doctrine, as refined and explained in Real Estate
Investors, has two prongs. First (or rather second, under the usual analysis),
the challenged action must have been undertaken with an improper motive.
That is, it must have been done not with the hope of securing a favorable
governmental result, but solely to harass and hinder another party. The
other prong of the doctrine is that the challenged action must have been
objectively baseless. Absent such a patent lack of merit, an action protected
under the First Amendment by the right of petition cannot be the basis
for litigation. (Real Estate Investors, 508 U.S. at ----, 113 S.Ct. at
FN20 At oral argument, BARSTOW argued that the case was controlled by Hi-Top Steel Corp. v. Lehrer, supra at footnote 17, 24 Cal.App.4th 570, 29 Cal.Rptr.2d 646. We may assume that the opinion in that case accurately summarizes the "sham" exception as it was recognized before it was further refined in Real Estate Investors. (The opinion in Hi-Top Steel, although issued almost a year after the decision in Real Estate Investors, does not cite that case or discuss its requirement that the targeted actions have been "objectively baseless.") However, Hi-Top's recognition of a sham exception to First Amendment rights does not aid BARSTOW. That case involved the adequacy of pleading, not the ability of the plaintiff to support the action with facts. We will also assume that BARSTOW's pleading is adequate; it failed, however, to establish the likelihood of prevailing as a matter of fact.
FN21 We are not informed whether Barstow actually took action in response to Sweet's objections. If it did not, then Sweet's actions can hardly be said to have had any damaging effect (although we discuss the "pattern" issue below).
We do not say that BARSTOW's method of proceeding was either illegal or improper. (See Stand Tall on Principles v. Shasta Union High Sch. Dist. (1991) 235 Cal.App.3d 772, 778-782, 1 Cal.Rptr.2d 107.) When time is of the essence, it is not necessarily unreasonable for a public entity to offer at least preliminary assurance to the developer that his project is viewed favorably by the entity.
We also stress again that the purpose of section 425.16 is well served by requiring the plaintiff to make a positive showing. The statute clearly expresses a legislative suspicion of SLAPP suits and an intent to weed out all but those having demonstrable merit. It is not unfair to insist that a party who chooses to bring what appears on its face to be a SLAPP suit be prepared to back up his claim with facts. Under College Hospital, it is not sufficient for the plaintiff simply to assure the court that the defendant's actions were legally and/or factually baseless.
We now address the Keating and Krier lawsuits. We find them subject
to an insuperable barrier.
FN24 As we begin our discussion of a possible cause of action for malicious prosecution, we are aware that Barstow has not attempted to state any such claim and has not formally been given the opportunity to do so in the trial court. However, in our request for an informal response, we expressly asked Barstow to address the issue of whether any tort remedy other than malicious prosecution was available, as well as the "favorable termination" problem we discuss below. Thus, Barstow has had every opportunity to argue the issue, and the factual record is complete in all pertinent respects. Thus, we have deemed it more efficient to consider whether, if Barstow were to plead such a claim against Ludwig, it could support it to the extent required by section 425.16.
However, as Barstow repeatedly stresses, it is not suing Keating or
Krier; it is suing Ludwig. We will agree, arguendo, that a former defendant
can assert other tort causes of action against a party who urged the prior
litigation, but did not file it. The holding in Pacific Gas & Electric
Co. v. Bear Stearns & Co., supra, 50 Cal.3d 1118, 270 Cal.Rptr. 1,
791 P.2d 587, does not prohibit the filing of such torts; we note that
such other claims were made against the cross-defendant in Wilcox v. Superior
Court, supra, 27 Cal.App.4th 809, 33 Cal.Rptr.2d 446. However, this does
not aid Barstow.
FN26 However, a person who urges, procures, or otherwise is actively instrumental in the filing of a lawsuit may be sued for malicious prosecution along with the actual plaintiff/prosecutor. (Pacific Gas & Electric v. Bear Stearns & Co., supra, 50 Cal.3d at p. 1131, fn. 11, 270 Cal.Rptr. 1, 791 P.2d 587; Cedars-Sinai Medical Center v. Superior Court (1988) 206 Cal.App.3d 414, 417, 253 Cal.Rptr. 561; 5 Witkin, Summary of Cal.Law (9th ed. 1988), Torts, § 418, p. 503.) Thus, under the facts developed in the record, Ludwig is subject to suit as a defendant in a malicious prosecution action.
Barstow, however, has urged repeatedly that the lawsuits were "objectively
baseless" because neither Keating nor Krier had legal standing to sue.
The issue of standing to bring a CEQA challenge is a complex one, both
in respect to the concept of exhaustion of administrative remedies and
that of possession of a legal beneficial interest. (See and cf. e.g. Bozung
v. Local Agency Formation Com. (1975) 13 Cal.3d 263, 272, 118 Cal.Rptr.
249, 529 P.2d 1017; California Aviation Council v. County of Amador (1988)
200 Cal.App.3d 337, 340-345, 246 Cal.Rptr. 110; Kane v. Redevelopment Agency
(1986) 179 Cal.App.3d 899, 903-908, 224 Cal.Rptr. 922; Environmental Law
Fund, Inc. v. Town of Corte Madera (1975) 49 Cal.App.3d 105, 114, 122 Cal.Rptr.
282.) On the record before us, it would not be easy to resolve. Fortunately,
we need not do so, because Barstow has effectively resolved it for us.
FN28 At least one federal case takes the position that the prosecution of a lawsuit--however meritorious--by one who does not possess legal standing to sue can constitute "objectively baseless" conduct. (In re Burlington Northern, Inc. (5th Cir.1987) 822 F.2d 518, 530.) We might question the wisdom of applying such an approach to an action raising environmental concerns, given both the importance of encouraging public participation in land use decisions, and the uncertainty concerning standing, which we mention below.
FN29 Again we refer to the defects in Barstow's efforts to show that neither Keating nor Krier had standing in the sense of a protectible beneficial interest in a project to be built in Barstow. (See Bozung.) The question of whether either attempted to exhaust administrative remedies appears to have been more susceptible to resolution in Barstow's favor.
FN30 The holding of Lackner, followed in Warren v. Wasserman, Comden, & Casselman, is that a termination based on a "technical or procedural as distinguished from substantive" issue is not "on the merits" for the purpose of bringing a subsequent malicious prosecution action. Thus, in those cases, a termination based on the statute of limitations did not qualify as a "favorable termination."
In the Keating and Krier cases, plaintiffs voluntarily dismissed the actions. A voluntary and unilateral dismissal can constitute a decision on the merits. Thus, in MacDonald v. Joslyn (1969) 275 Cal.App.2d 282, 289, 79 Cal.Rptr. 707 the defendant, as plaintiff in the prior action (a will contest) had gone through three sets of lawyers in less than five months; the third firm sought and received leave to withdraw on the ground that defendant had failed to provide them with any information or evidence supporting the contest; defendant then appeared in propria persona and dismissed the action. In the circumstances, the dismissal reflected on the merits. Somewhat analogously, a dismissal for failure to diligently prosecute creates an "assumption that one does not simply abandon a meritorious action once instituted," and thus constitutes a termination in favor of the defendant. (Minasian v. Sapse, supra, 80 Cal.App.3d at p. 827, 145 Cal.Rptr. 829.)
However, a dismissal resulting from a settlement is almost invariably held not to reflect on the merits and not to support any cause of action for malicious prosecution. "Generally, a dismissal resulting from a determination does not constitute a favorable determination because '... the dismissal reflects ambiguously on the merits of the action as it results from the joint action of the parties, thus leaving open the question of defendant's guilt or innocence.' " (Pender v. Radin (1994) 23 Cal.App.4th 1807, 1814, 29 Cal.Rptr.2d 36, quoting Minasian v. Sapse, supra, 80 Cal.App.3d at p. 827, fn. 4, 145 Cal.Rptr. 829.)
Here, both the Keating and Krier lawsuits were dismissed by the plaintiffs
after the execution of settlement agreements. In the Keating case, the
parties agreed to a cost waiver and Barstow agreed to recirculate the proposed
negative declaration for the Tanger project. Barstow's concessions in the
Krier matter involved the payment of at least $75,000, mostly to Krier
and/or her attorney, and the remainder for the environmental purposes presumably
favored by Krier. A simple waiver of costs is alone enough to disqualify
a settlement as a "favorable termination." (Pender v. Radin, supra,
23 Cal.App.4th at p. 1814, 29 Cal.Rptr.2d 36.) Thus, it is clear that
the settlements here involved a compromise and the surrender of something
of value by Barstow.
FN31 We comment again, with some puzzlement, that the agreement contemplated that Krier would receive $20,000 for work opposing Ludwig's proposed Adelanto project.
There is some authority to support the proposition that if a termination is not clearly on the merits (as by a judgment after trial), "the reasons underlying the termination must be examined to see if it reflects the opinion of either the court or the prosecuting party that the action would not succeed." (Haight v. Handweiler (1988) 199 Cal.App.3d 85, 88, 244 Cal.Rptr. 488.) In Haight, for example, the prior action had resulted in a settlement by one defendant in return for plaintiff's dismissal of that defendant and the defendant who later sued for malicious prosecution. The latter case went to trial and evidence was taken on the question of the original plaintiff's motives in dismissing the defendant, with the court ruling that the dismissal was made solely because the paying defendant required it. This was held not to reflect on the merits, and the malicious prosecution suit failed.
However, Haight must be read in light of its facts--specifically, that it involved a dismissal in favor of a defendant who did not pay anything, did not give up anything, and did not even consent to the settlement. Despite these apparent indicia in favor of defendant, the court allowed the plaintiff to show that the dismissal was motivated by considerations not going to the merits. By contrast, where a defendant has participated in a settlement, efforts to argue that the settlement really does reflect the plaintiff's opinion on the merits have met with no success.
In Pender v. Radin, supra, three family members were sued on a contract. One defendant settled for the payment of cash, and all three waived costs and attorneys' fees; furthermore, the two who did not personally pay money to plaintiff assisted the relative who did pay by forgiving a debt he owed them. In affirming the granting of summary judgment for the malicious prosecution defendant, the court stated flatly that "the Penders cannot establish that Radin's lawsuit was terminated in their favor ... by the terms of the settlement, the Penders waived fees and costs and thereby gave up something to get the lawsuit against them dismissed. On these facts, the Penders cannot show there had been a legal termination of the Radin lawsuit in their favor; rather, the Radin litigation was terminated by agreement without regard to its merits." (23 Cal.App.4th at p. 1814, 29 Cal.Rptr.2d 36; emphasis added.)
Villa v. Cole (1992) 4 Cal.App.4th 1327, 6 Cal.Rptr.2d 644, cited by Barstow, is similar to Haight v. Handweiler. The malicious prosecution action was brought by a defendant who was dismissed as part of a "global settlement" in which he did not participate and to which he did not agree. However, once it was established that the defendant who negotiated the settlement had demanded the dismissal of the other defendant as a condition of settling, the matter was closed; no cause of action for malicious prosecution could be brought by the non-agreeing defendant.
Significant to this case is the court's treatment of the argument that the malicious prosecution plaintiff should be permitted to inquire into the motivations of the original plaintiff, in an effort to establish that they really dismissed him because they felt the action could not be won against him. The court pointed out that this argument "wrongly confuses the elements of probable cause and favorable termination. 'Whether a prior action was legally tenable goes to the issue of probable cause, that is, did the defendant have an honest and reasonable belief in the truth of the allegations. [Citation.] Whether a prior action was terminated favorably tends to show the innocence of the defendant in the prior action [citations] and is not affected by the objective tenability of the claim. In short, these two elements of the malicious prosecution tort serve different purposes, and the legal tenability of the underlying action is not the standard by which to judge whether the action was terminated in [the malicious prosecution plaintiff's] favor. The standard ... is simply whether the termination bears on the merits of the underlying action.' " (4 Cal.App.4th at p. 1337, 6 Cal.Rptr.2d 644, citing Warren v. Wasserman, Comden & Casselman, supra, 220 Cal.App.3d at p. 1303, 271 Cal.Rptr. 579.) The Villa court then held that, because the nature of the settlement as a matter of law did not constitute a favorable termination, the original plaintiffs' motivations for settling the prior action, and the viability of that action, were irrelevant.
These principles control this case, especially when it is remembered that, according to the statutory scheme, Barstow had to show a "probability" that it would prevail. Once again we note that, with the possible exception of the standing/exhaustion issues, Barstow did not come close to establishing that the two lawsuits lacked merit. We are unimpressed with its argument that the settlements were prompted solely by the nuisance value of the lawsuits and, in the Krier case, by the danger of losing the Tanger project. Villa and Handweiler make clear that if a dismissal results from a negotiated settlement, the plaintiff's motivation is not to be considered; we hold that a defendant who elects to settle a lawsuit may not later come into court as a plaintiff and insist that because he only did so under duress, he should be allowed to prove that the action was baseless. As the cases demonstrate, this argument misses the point. A negotiated settlement does not constitute a "favorable termination."
Of course we recognize that cases are settled for many reasons and we are sympathetic to the problem of nuisance suits. However, actions for malicious prosecution have historically been viewed with disfavor due to the potential chilling effect on persons considering reporting a crime or pursuing legal remedies in court. (Pender v. Radin, supra, 23 Cal.App.4th at p. 1818, 29 Cal.Rptr.2d 36.) For this reason, the twin requirements of no probable cause and favorable termination are, and should be, strictly enforced. There is no legal way for a defendant who elects to settle a suit rather than going to trial to demonstrate that the dismissal resulting from the settlement constituted a favorable termination on the merits.
Having, pursuant to the direction in Pacific Gas & Electric Co.
v. Bear Stearns & Co., applied the standards for malicious prosecution
actions to Barstow's claims here, we determine that they cannot succeed.
The trial court erred in denying Ludwig's motion to strike under section
FN33 Barstow proffers the argument that Ludwig engaged in a "series" of baseless challenges. Federal cases recognize that one or more successful actions or administrative challenges may nevertheless form part of an overall pattern of strategic, bad faith action designed to frustrate a competitor. (See USS-POSCO Indust. v. Contra Costa County Building & Construction Trades Council (9th Cir.1994) 31 F.3d 800, 810-811.) However, we find the rule inapplicable here. Barstow alleged only four acts, two of which, as we have found, cannot be said to have been meritless. We need not decide whether brief comments at a public meeting, or the requesting of information, can constitute part of a pattern of what is overall baseless opposition, because a total of four activities, two of which are not meritless as a matter of law, cannot constitute such a pattern. Compare USS-POSCO Indust., which involved a total of 29 proceedings, 15 of which ended successfully; held, no pattern of baseless litigation was shown.
Let a peremptory writ issue as prayed. Costs and attorneys' fees to petitioner pursuant to subdivision (c) of § 425.16.
DABNEY, Acting P.J., and McKINSTER, J., concur.