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VAN WORMER RESORTS, INC. v. VAN LANINGHAM

 
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PostPosted: Sun Aug 08, 2010 12:48 pm    Post subject: VAN WORMER RESORTS, INC. v. VAN LANINGHAM Reply with quote

VAN WORMER RESORTS, INC. v. VAN LANINGHAM

VAN WORMER RESORTS, INC., Plaintiff and Appellant,
v.
NANCY S. VAN LANINGHAM, et al., Defendants and Respondents.

No. B213476.

Court of Appeals of California, Second District, Division Three.

Filed July 21, 2010.

The Clark Law Firm and David R. Clark for Plaintiff and Appellant.

Baker, Keener & Nahra, Robert C. Baker, Mitchell F. Mulbarger and James D. Hepworth for Defendants and Respondents, McNicholas & McNicholas, LLP; John P. McNicholas.

Dapeer, Rosenblit & Litvak, William Litvak and Charlene J. Wynder for Defendants and Respondents, Nancy S. Van Laningham and Baja Fishing & Resorts, Inc.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

CROSKEY, J.

In this case, the plaintiff and appellant, Van Wormer Resorts, Inc. (hereafter, VWR) seeks reversal of the trial court's orders (1) striking its complaint for malicious prosecution pursuant to the anti-SLAPP statute (Code Civ. Proc., 425.16) and (2) awarding attorneys fees pursuant to Code of Civil Procedure, section 425.16, subdivision (c)(1). The defendants and respondents (hereafter, collectively, defendants), Nancy S. Van Laningham (Van Laningham), individually and dba Baja Fishing and Resorts, Baja Fishing and Resorts, Inc., McNicholas & McNicholas LLP, and John P. McNicholas (hereafter, McNicholas),[ 1 ] urge that the orders be affirmed on the ground that VWR failed to demonstrate a probability of succeeding on its malicious prosecution claim and that the order striking the complaint and the subsequent order awarding attorney fees were proper.

In our view, this record clearly demonstrates that VWR failed to present any evidence showing either an absence of probable cause or the existence of malice. Thus, the trial court's order striking the complaint was correct. In addition, VWR has waived any objection to the order awarding attorney fees. We will therefore affirm both orders.
FACTUAL AND PROCEDURAL BACKGROUND[ 2 ]

For many years, Van Laningham's father was the exclusive reservations agent for a chain of hotels in Baja, California owned by the Van Wormer family.[ 3 ] He eventually sold the reservations business to Van Laningham. Until 2001, the arrangement between the Van Wormers and the Van Laninghams was a handshake deal. However, on November 16, 2001, Van Laningham and individual members of the Van Wormer family entered into a 15-year contract under which Van Laningham had the exclusive right to market and accept reservations for the hotels, for a 10 percent commission.

In mid-2005, the Van Wormers sought to change the agreement. It was suggested that Van Laningham work for them as an employee or that they buy her out. The parties negotiated a sale of the business and reached an agreement on price. Van Laningham believed, however, that the price was less than the value of the business, but was nonetheless willing to accept it in order to avoid litigation. Due to the Van Wormers' cash flow circumstances, however, the money was to be paid over a period of time. The deal was not completed when the parties could not agree on the issues relating to securing such payment.

On September 30, 2005, VWR (which was not a party to the agreement) sent a letter to Van Laningham notifying her that it was terminating the agreement effective that same day.[ 4 ] Thereafter, the Van Wormers assumed complete control of the reservation business, set up an office in the same area that Van Laningham had operated, hired three of Van Laningham's employees to run the business, and terminated Van Laningham's ability to access the reservation system.

On October 13, 2005, Van Laningham and Baja Fishing and Resorts, Inc. filed a complaint against VWR; Robert Van Wormer; Rosa Maria Ruiz Gonzalez de Van Wormer; Carlos Jose Van Wormer Ruiz (aka Charles Van Wormer); Roberto Van Wormer; and Eduardo Van Wormer. The complaint alleged causes of action against all defendants for (1) breach of contract, (2) breach of the covenant of good faith and fair dealing, (3) intentional interference with contractual relationship, (4) intentional interference with prospective economic advantage, (5) conversion, (6) defamation per se, (7) constructive trust, and (Cool accounting. Van Laningham was represented by McNicholas in the action.

In response, Carlos Van Wormer and Roberto Van Wormer each filed a cross-complaint against Van Laningham and Baja Fishing and Resorts, Inc., alleging 11 causes of action, including breach of the same agreement.[ 5 ] Both Carlos and Roberto Van Wormer were represented by David R. Clark, who is counsel for appellants herein. After extensive discovery, the matter proceeded to trial.

On the first day of trial, the attorneys for the parties discussed settlement. Although they did not reach a complete resolution of their dispute, they did agree to substantially simplify the case. Van Laningham agreed to dismiss all causes of action against all defendants, with prejudice, with the exception of the first cause of action for breach of contract. In exchange, the Van Wormers agreed to a dismissal of both cross-complaints in their entirety, with prejudice. Requests for dismissal reflecting this agreement, both of which were handwritten, were filed on April 30, 2007.

Following this partial settlement, the matter went to trial solely on the breach of contract cause of action. Shortly before the verdict, VWR (represented by the same attorneys as the individual Van Wormers) obtained a directed verdict. Van Laningham, however, obtained a verdict against the individual Van Wormers in the amount of $3,317,326. The judgment against the Van Wormer family was affirmed by Division 5 of this court. (See No. B201951, unpub. opn. filed 10/15/08.)

On June 8, 2008, VWR filed the instant action for malicious prosecution based on the claim that the unsuccessful breach of contract action defendants had filed against VWR and as to which it had received a directed verdict. The defendants, in response, each filed a special motion to strike pursuant to Code of Civil Procedure, section 425.16. The trial court, in ruling on those motions, first concluded that the defendants had been engaged in protected activity in filing the action against VWR; thus the first prong of section 425.16 was satisfied. The court then found, however, that VWR had not demonstrated a probability of success in its action for malicious prosecution. The court therefore granted defendants' motions to strike on November 10, 2008. The court thereafter issued an order awarding attorney fees (Code Civ. Proc. 425.16, subd. (c)(1)) to McNicholas in the sum of $11,645 and to Van Laningham in the sum of $25,278.50.

VWR filed a timely appeal to both orders.
CONTENTIONS OF THE PARTIES

VWR argues that it had provided a sufficient factual showing to demonstrate a prima facie case for malicious prosecution and the defendants' motions were therefore improperly granted. As we explain, we disagree and hold that the trial court's decision was correct.
DISCUSSION
1. Standard of Review

Code of Civil Procedure section 425.16, the anti-SLAPP statute, provides in relevant part: "A 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 or the California Constitution in connection with a public issue shall be subject to a special motion to strike, unless the court determines that the plaintiff has established that there is a probability that the plaintiff will prevail on the claim." ( 425.16, subd. (b)(l).)

The party moving to strike a cause of action under this section has the initial burden to show that the cause of action arose from conduct "in furtherance of the [moving party's] right of petition or free speech." (Code Civ. Proc. 425.16, subd. (b)(l); Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 67.) Once that burden is met, the burden shifts to the opposing party to demonstrate the "probability that the plaintiff will prevail on the claim." (Ibid.) In other words, the plaintiff is required to demonstrate that its claim is not only supported by a legally sufficient pleading, but also by a prima facie showing of facts sufficient to sustain a favorable judgment if the evidence submitted by the plaintiff is believed. ( Zamos v. Stroud (2004) 32 Cal.4th 958, 965; Plumley v. Mockett (2008) 164 Cal.App.4th 1031, 1046 (Plumley).)

As in Plumley, there is no dispute here that the defendants, in filing the breach of contract action that named VWR as a defendant, were exercising their right of petition thus bringing their alleged misconduct within the ambit of the anti-SLAPP statute. (See Jarrow Formulas, Inc. v. LaMarche (2003) 31 Cal.4th 728, 734-735.) Thus, the first prong of section 425.16 was satisfied. The issue before us in this appeal is whether the plaintiff presented evidence in opposition to defendants' anti-SLAPP motions that, if believed by the trier of fact, would be sufficient to support a judgment in his favor. This question is one of law, and we review the trial court's decision de novo. (Plumley, supra, 164 Cal.App.4th at p. 1047.) In doing so, we "`consider[] the pleadings and evidentiary submissions of both the plaintiff and the defendant ([Code Civ. Proc.,] 425.16, subd. (b)(2)); though [we do] not weigh the credibility or comparative probative strength of competing evidence, [we will] grant the motion if, as a matter of law, the defendant's evidence supporting the motion defeats the plaintiff's attempt to establish evidentiary support for the claim.' [Citation.]" (Ibid, italics omitted.)
2. VWR Failed To Demonstrate A Probability of Success

VWR's burden in opposing the motions to strike was to demonstrate a probability of prevailing on its malicious prosecution claim. This required that it demonstrate that the complaint was 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 was believed. Thus, it was required to submit admissible evidence that was relevant to establishing the essential elements of a claim for malicious prosecution: (1) that the underlying action was favorably terminated on the merits; (2) that the defendants lacked "probable cause" in bringing the underlying action; and (3) that the underlying action was brought with "malice." (Bertero v. National General Corp. (1974) 13 Cal.3d 43, 50 (Bertero); Sheldon Appel Co. v. Albert & Oliker (1989) 47 Cal.3d 863, 871 (Sheldon Appel).) We will only discuss the last two of these issues.
a. Probable Cause

A malicious prosecution plaintiff must also plead and prove that the underlying claim was brought without probable cause. A claim lacks probable cause only if the claim is so completely lacking in apparent merit that no reasonable attorney would have thought the claim tenable. (Sheldon Appel, supra, 47 Cal.3d at pp. 885-886; Klein v. Oakland Raiders, Ltd. (1989) 211 Cal.App.3d 67, 76.) It is insufficient to show that the case was unlikely to succeed. In fact, litigants "have a right to present issues that are arguably correct, even if it is extremely unlikely that they will win." (In re Marriage of Flaherty (1982) 31 Cal.3d 637, 650.)

The question of probable cause is a question of law. The court must make an objective determination of the "reasonableness" of the defendant's conduct in instituting a prior civil action. If the court determines that the prior action was objectively reasonable, then the plaintiff has failed to meet the threshold requirement of demonstrating an absence of probable cause, and the defendant is entitled to prevail. (Sheldon Appel, supra, 47 Cal.3d at p. 878.)

In the present case, VWR's principal, if not sole, argument, that Van Laningham and McNicholas lacked probable cause to pursue the underlying action against VWR, is based on the fact that VWR had not only not been a signatory to the underlying agreement, but, indeed, VWR had not even been incorporated at the time of its execution in November, 2001.[ 6 ] In support of the significance of this circumstance, VWR argues that the doctrine of "reverse alter ego" has never been recognized in California, and was explicitly rejected in Postal Instant Press, Inc. v. Kaswa Corp. (2008) 162 Cal.App.4th 1510, 1518-1524 (Postal Instant Press).)

As the ruling of the trial court makes clear, VWR's argument is without merit. First, Postal Instant Press was not decided until 2008, three years after the underlying action was filed and approximately one year after the underlying action was concluded. As the trial court stated: "[VWR's] argument that Van Laningham and her counsel pursued an untenable legal theory based on a case which was decided three years after they filed the underlying complaint is unpersuasive, given that the standard is whether defendant or counsel sought `recovery upon a legal theory which is untenable under the facts known . . . .' [Citation.]"

Second, even the court in Postal Instant Press recognized that whether the doctrine of "reverse alter ego" was a valid theory was "an issue of first impression in this state." (Postal Instant Press, supra, 162 Cal.App.4th at p. 1518.) A "case of first impression" decided three years after the fact, hardly supports VWR's theory that no reasonable attorney could have relied on the "reverse alter ego" doctrine in 2005.

In addition, contrary to VWR's contention, there was some authority supporting the application of that doctrine in California. In Taylor v. Newton (1953) 117 Cal.App.2d 752, 760-761, the court stated that a "`corporation may be but the mere instrumentality through which, for their convenience, the individuals who own all the capital stock transact their business.'" According to the court, "the law and equity will hold the corporation obligated for the acts of the sole owners of its stock" where "to adhere to the fiction of a separate existence of [the corporation] . . . would promote an injustice to the creditors of [the individual] . . . ." (Ibid.) According to the trial court, "there is now a split of authority on whether `reverse alter ego' is a valid theory in California, despite [the fact] that Taylor was decided in 1953 and Postal was decided in 2008." VWR does not address Taylor in its opening brief.

Where there is a split of authority in the law, an attorney in our adversarial system may reasonably rely on and pursue either authority. In such a circumstance, it could not be said that such an attorney was acting without probable cause. (Copenbarger v. International Ins. Co. (1996) 46 Cal.App.4th 961, 966.) As already noted, when the underlying action was commenced in the present case, there was no split of authority, because Postal Instant Press had not yet been decided. Thus, Taylor was the only authority addressing the issue in 2005 when the underlying breach of contract was filed and at all times during its prosecution.

In addition, evaluation of probable cause should take into account the "evolutionary potential of legal principles." (Sheldon Appel, supra, 47 Cal.3d at p. 886.) "`To hold that the person initiating civil proceedings is liable unless the claim proves to be valid, would throw an undesirable burden upon those who by advancing claims not heretofore recognized nevertheless aid in making the law consistent with changing conditions and changing opinions. There are many instances in which a line of authority has been modified or rejected. To subject those who challenge this authority to liability for wrongful use of civil proceedings might prove a deterrent to the overturning of archaic decisions.' [Citations.]" ( Leonardini v. Shell Oil Co. (1989) 216 Cal.App.3d 547, 568.)

Thus, the defendants were fully justified in advancing the "reverse alter ego" theory, even if it was a claim "not heretofore recognized" because it was a valid attempt to extend a theory that had certainly been accepted in other jurisdictions (as well as in California under Taylor). If attorneys could only bring claims that had already been accepted, there would never be any development of the law. This is inconsistent with the "evolutionary potential of legal principles" recognized in Sheldon Appel.

Significantly, the defendants not only had a legal justification for relying on the "reverse alter ego" doctrine to join VWR as a defendant in their breach of contract action, but they also had a factual basis as well. The evidence supporting their claim was summarized by the trial court in its extensive written tentative decision (which it adopted as its final ruling): "[The] defendants [submitted] overwhelming evidence to color their alter ego claim, including evidence that the Van Wormers were commingling assets with [VWR] by paying personal expenses (home and life insurance) out of corporate accounts, paying expenses of the hotel boat fleet out of the corporation despite that the hotels were responsible for these expenses, and paying monies to Van Laningham from corporate accounts despite that it was the individual Van Wormers that owed the money, inter alia. [] Defendants further [submitted] evidence that [VWR], Inc. was created by the individual Van Wormers for the express purpose of taking Van Laningham's business. [] Finally, defendants [submitted] the September 30, 2005 letter sent by Carlos Van Wormer as CEO of Van Wormer Resorts, a California corporation, which terminated Van Laningham's contract and gave rise to the underlying suit. [] Based on defendants' evidence and the fact that there was authority supporting Van Laningham's reverse alter ego claim at the time the underlying complaint was filed, the court finds that plaintiff's evidentiary showing on the probable cause element of malicious prosecution is insufficient to demonstrate a probability of prevailing."

Finally, VWR is in a particularly poor position to argue that it was unreasonable to rely on the "reverse alter ego" theory because that is exactly what its own counsel did in the underlying case. He filed cross-complaints in the underlying action against Baja Fishing and Resorts, Inc. on behalf of Carlos Van Wormer and Roberto Van Wormer. Both cross-complaints alleged causes of action for breach of contract against Baja Fishing and Resorts, Inc., even though Baja Fishing and Resorts, Inc. was not a party to the contract. The cross-complaint alleged that Baja Fishing and Resorts, Inc. was the alter ego of Van Laningham, the very same theory of which VWR now asserts had been improperly relied upon by defendants. (See fn. 5, ante.)
b. Malice

In order to maintain an action for malicious prosecution, a plaintiff must also plead and prove that the defendant brought the underlying action with malice. This requires that the plaintiff establish that the defendant was motivated in bringing the underlying action by something other than bringing a perceived guilty person to justice or the satisfaction in a civil action of some personal or financial purpose. (See, e.g., Bertero, supra, 13 Cal.3d at p. 54.) "In other words, in California, the commission of the tort of malicious prosecution requires a showing of an unsuccessful prosecution of a criminal or civil action, which any reasonable attorney would regard as totally and completely without merit [citation], for the intentionally wrongful purpose of injuring another person." (Downey Venture v. LMI Ins. Co. (1998) 66 Cal.App.4th 478, 499 (Downey Venture).)

In the present case, VWR failed to present any evidence that defendants filed or prosecuted the underlying action with malice. Instead, VWR argues that malice may be inferred from a lack of probable cause. This argument is without merit for several reasons.

First, as demonstrated above, there was probable cause to bring the action against VWR. Accordingly, the basis for the supposed inference the lack of probable cause is clearly absent in this case.

In addition, we have previously and explicitly held that malice cannot be inferred from a lack of probable cause. In Downey Venture, the court stated: "Thus, by itself, the conclusion that probable cause is absent logically tells the trier of fact nothing about the defendant's subjective state of mind. That being so, it does not seem logical to permit any inference to be drawn as to a subjective state of mind solely from the absence of objective tenability. Evidence Code section 600, subdivision (b), provides, `An inference is a deduction of fact that may logically and reasonably be drawn from another fact or group of facts found or otherwise established in the action.' (Italics added.) Merely because the prior action lacked legal tenability, as measured objectively (i.e., by the standard of whether any reasonable attorney would have thought the claim tenable [see Sheldon Appel, supra, 47 Cal.3d pp. 885-886]), without more, would not logically or reasonably permit the inference that such lack of probable cause was accompanied by the actor's subjective malicious state of mind. In other words, the presence of malice must be established by other, additional evidence. [] "As we have discussed, that evidence must include proof of either actual hostility or ill will on the part of the defendant or a subjective intent to deliberately misuse the legal system for personal gain or satisfaction at the expense of the wrongfully sued defendant. (See Albertson v. Raboff []46 Cal.2d [375] at p. 383.)" (Downey Venture, supra, 66 Cal.App.4th at pp. 498-499, fn. omitted.)

In the present case, VWR did not offer any evidence of actual hostility or ill will by defendants. Indeed, there was no evidence of any malice on the part of defendants at all. To the contrary, all of the evidence presented showed that defendants did not prosecute the underlying action out of any malice or ill will toward VWR.

Because VWR failed to show any malice on the part of the defendants in filing or prosecuting the underlying action for breach of contract, and because the evidence showed that defendants had no purpose in pursuing the underlying action other than to advance Van Laningham's interests in seeking redress for her damages, the motions to strike were properly granted.
3. VWR's Objection To The Order Granting Attorney Fees Has Been Waived

VWR also contends that defendant's motions for attorney's fees were improperly granted. However, it has not offered any argument in support of that contention. Accordingly, VWR has waived the issue. "An appellate brief `should contain a legal argument with citation of authorities on the points made. If none is furnished on a particular point, the court may treat it as waived, and pass it without consideration.'" (In re Marriage of Schroeder (1987) 192 Cal.App.3d 1154, 1164 (quoting 9 Witkin, Cal. Procedure (3d ed. 1985) Appeal, 479, p. 469); see also San Mateo County Coastal Landowners' Assn. v. County of San Mateo (1995) 38 Cal.App.4th 523, 559 ["appellants have waived this issue on appeal by failing to support it by argument or citation of authority"].)
DISPOSITION

The orders appealed from are affirmed. The defendants shall recover their costs on appeal.

WE CONCUR:

KLEIN, P. J.

ALDRICH, J.
1. Certain of the defendants have different arguments and positions with respect to the issues and, indeed, have filed separate briefs. However, in light of our analysis and conclusion in this matter, there is no reason to discuss such differing interests and we will make no distinction between or among the several defendants except as may be necessary to explain the factual background of this matter.
2. The facts we recite are taken from the record and are not in dispute.
3. This term is used as a collective description of the following individuals: Robert Van Wormer, Rosa Maria Ruiz Gonzalez de Van Wormer, Carlos Jose Van Wormer Ruiz (aka Charles Van Wormer), Roberto Van Wormer and Eduardo Van Wormer.
4. This letter provides: "Dear Ms. Van Laningham: We regret that we have been unable to resolve our differences regarding the purchase of Baja Fishing and Resorts. In order to provide for a smooth transition of operations, Van Wormer Resorts will be assuming sole responsibility for booking reservations for hotel rooms and fishing boats at the Van Wormer hotels and resorts, effective as of 5:00 p.m. PST today (the `Cutoff Time'). We will honor reservations made by you before the Cutoff Time, but not subsequently. Of course, we will pay you commissions earned with respect to reservations booked by you before the Cutoff Time according to our existing arrangement. In order to effect this transition, we will be terminating your ability to access our reservations system, effective as of the Cutoff Time. Please do not attempt to make reservations after the Cutoff Time. Very truly yours, Van Wormer Resorts, a California corporation. By /s/Charles J. Van Wormer, Carlos Van Wormer, President and CEO." (Italics added.)
5. In light of one of the principal arguments advanced by VWR, it is worth noting that Baja Fishing and Resorts, Inc., was not formed at the time the agreement was executed and was not a party thereto (see discussion, post.)
6. See footnote 5, ante.



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