Opinion
A126215
01-31-2012
BRUCE PALMBAUM, Plaintiff and Respondent, v. WEINBERG, ROGER & ROSENFELD, Defendant and Appellant.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
(San Francisco County Super. Ct. No. CGC-08-480943)
This is an appeal from an order denying the special motion to strike filed by appellant Weinberg, Roger & Rosenfeld (Weinberg) pursuant to Code of Civil Procedure section 425.16, the so-called anti-SLAPP statute. The trial court denied the motion after finding that respondent Bruce Palmbaum had shown a probability of prevailing on the merits of his malicious prosecution action against Weinberg, rejecting Weinberg's contention that he had no evidence it acted with malice in prosecuting a real property action against him. For the reasons set forth below, we reverse the trial court's decision.
Unless otherwise stated, all statutory citations are to the Code of Civil Procedure.
FACTUAL AND PROCEDURAL BACKGROUND
Corinthian Homes, a development corporation formed by Palmbaum, submitted the winning (and only) bid at a judicial foreclosure sale of a parcel of real property located in Rancho Murieta (parcel 007). Palmbaum asserts a single cause of action for malicious prosecution against Weinberg based on its conduct as an attorney of record in an action to set aside that sale. In setting out the factual and procedural history of the action alleged to have been maliciously prosecuted (set aside action), we quote at length from Amalgamated Bank v. Superior Court (2007) 149 Cal.App.4th 1003 (Amalgamated Bank) , a decision of our colleagues in the Third District in a writ proceeding arising from that action.
Amalgamated Bank, formerly First Interstate Bank, as corporate cotrustee for Pension Trust Fund for Operating Engineers, and Pension Trust Fund for Operating Engineers (collectively, PTF) "held a security interest in the real property (commonly known as parcel 007) owned by Winncrest. Winncrest ceased making payments on the property in 1993. PTF commenced an action against Winncrest for judicial foreclosure of parcel 007 and others. The trial court entered judgment allowing a sale of the property with a right of redemption, specifying the amount of the debt as slightly more than $17 million. Winncrest appealed, and this court affirmed the judgment in 2003. (First Interstate Bank v. Winncrest Homes, Inc. (July 25, 2003, C035434, C036722) [nonpub. opn.].)
"As judgment creditor, PTF requested that the Sacramento County Sheriff issue a writ of sale to execute upon parcel 007 and sell it to the highest bidder. A public auction was scheduled for February 24, 2004, at 10:00 a.m. Palmbaum arrived there with $10 million in available funds. The property was worth approximately $6.5 million, and PTF intended to place an opening bid of $6 million.
"The sheriff commenced the sale around 10:00 a.m. (the exact time is the subject of intense dispute) and Palmbaum submitted an opening bid of $2,000. Palmbaum's bid turned out to be the only bid because PTF's designated bidders [attorney Edward Mevi of Stanton, Kay and Watson, LLP, and its asset manager, David Howard of McMorgan & Company] got stuck in traffic on the morning of February 24 on their way from the Bay Area to Sacramento, arriving at the auction room sometime after 10:00 a.m. After the sheriff's gavel fell confirming a sale to Palmbaum for $2,000, the late-arriving bidders vociferously objected, demanding that the sale be rescinded. The officer replied that bidding was closed and the property had been sold to Palmbaum.
"PTF filed [an] action to set aside the foreclosure sale, cancel the sheriff's deed and restrain Palmbaum from disposing of the property. PTF also recorded a notice of lis pendens, effectively tying up parcel 007 during the pendency of the lawsuit. Although it had a year in which to do so, Winncrest did not exercise its right of redemption. The one-year redemption period expired on February 25, 2005." ( Amalgamated Bank, supra, 149 Cal.App.4th at pp. 1008-1010.) Weinberg and the Stanton firm were attorneys of record in the action to set aside the sale.
"Following extensive discovery, Palmbaum filed a motion for summary judgment. [Citation.] [Footnote omitted.] In granting the motion, [the trial court] found that PTF was barred from setting aside the sale, since (1) section 701.680, subdivision (a) provides that a judicial foreclosure sale pursuant to article 6 'may not be set aside for any reason,' a statute that abolished equitable grounds for rescission; (2) the sheriff conducted the sale according to law and without irregularities; (3) Winncrest did not exercise its right of redemption; (4) an action to set aside a foreclosure sale for irregularities may be commenced by the judgment debtor only if the purchaser was the judgment creditor (neither of which applied here); and (5) the sheriff did not have discretion to postpone the sale absent a joint request from both the judgment debtor and judgment creditor, which did not occur here.
"PTF filed a notice of appeal from the summary judgment. . . . Several months after the judgment was entered, Palmbaum made a motion to expunge the lis pendens. Judge McMaster issued a tentative ruling granting the motion and directing Palmbaum to prepare a formal order. At that point, PTF filed the first of two petitions for writ of mandate. [Citation.] [Footnote omitted.] The stated primary purpose of the petition was to 'preserve this court's jurisdiction' by staying the expungement order. PTF claimed that if the lis pendens were allowed to be expunged, Palmbaum would be able to sell the property to a third party, thus rendering the summary judgment appeal essentially moot." ( Amalgamated Bank, supra, 149 Cal.App.4th at pp. 1009-1010.)
After some discussion of the statutory law governing the lis pendens process, the Third District held that the appropriate standard for deciding whether to issue a writ of mandate vacating a postjudgment expungement order was whether the petitioner's real property claim had "probable validity." ( Amalgamated Bank, supra, 149 Cal.App.4th at p. 1017.) Then, in ultimately deciding that PTF's real property claim in the underlying set aside action did not have probable validity, the appellate court made the following observations:
"PTF brought this action to set aside the sale based on certain irregularities and on equitable grounds. However, section 701.680, subdivision (a) provides: 'Except as provided in paragraph (1) of subdivision (c), a sale of property pursuant to this article is absolute and may not be set aside for any reason. ' (Italics added.) Subdivision (c)(1) permits a sale to be set aside for irregularities, but only where the purchaser is the judgment creditor and the motion is made within 90 days by the judgment debtor or his or her successor in interest. [¶] As stated in [the California real property treatise authored by] Miller and Starr, in order to encourage fair bidding and the finality of sales, the Legislature has provided that upon payment of the purchase price, a sheriff's sale to a third party is absolute, subject only to the right of redemption, and may not be set aside. (4 Miller & Starr, supra, § 10:232, p. 765.) [¶] Here, the property was sold to a third party. By statute, only the judgment debtor can set aside the sale for irregularity and only where the purchaser was the judgment creditor. By purchasing the property at the sheriff's auction, Palmbaum became fee owner, subject only to the right of redemption. Because Winncrest did not bring an action to set aside the sale or exercise its right of redemption within the statutory timeframes, Palmbaum's title to the property has been perfected. There is simply no room in the statutory scheme for a judgment creditor (for whose benefit the foreclosure sale was held in the first place) to deprive a third party purchaser at a judicial foreclosure sale of his interest in the property by bringing an action to set aside the sale." ( Amalgamated Bank, supra, 149 Cal.App.4th at p. 1018.)
After the Third District dismissed PTF's petition for writ of mandate and the California Supreme Court denied review, Palmbaum's counsel wrote a letter demanding that PTF dismiss its appeal of the trial court's summary judgment ruling in light of the Court of Appeal's published decision holding that the set aside action lacked probable validity. (Amalgamated Bank v. Superior Court, 2007 Cal. LEXIS 8514 (Cal., Aug. 8, 2007).) Finally, PTF agreed and, on November 14, 2007, an order dismissing the appeal was filed.
The following year, on December 23, 2008, Palmbaum filed the operative complaint in this malicious prosecution action. On March 2, 2009, Weinberg moved to strike this complaint pursuant to section 425.16, contending "plaintiff cannot establish that there is a probability that he will prevail . . . because he cannot produce admissible evidence to establish that the underlying [set aside] action was initiated with malice by this moving defendant." (See Bertero v. National General Corp. (1974) 13 Cal.3d 43, 50 (Bertero) [malicious prosecution requires a showing the underlying suit was brought or continued with malice].)
Following a hearing at which both parties appeared with counsel, the trial court denied Weinberg's motion, reasoning: "I think that given the total lack of merit in the underlying case, or at least what the trier of fact could conclude was a total lack of merit, given the accusatory environment in which the case is brought, and given the filing and pursuit of the lis pendens and the way that it was, that however strong the argument is, an argument and an inference could be raised that the suit not only lacks merit but was malicious in the sense intended in the law."
Palmbaum also asserted a cause of action for malicious prosecution action against Edward Mevi and Morgan, Lewis & Bockius LLP, the firm that represented PTF in opposing the expungement motion and appealing the summary judgment. The special motions to strike (§ 425.16) of these defendants turned on a different issue—whether Palmbaum made a prima facie showing that the underlying action was brought or continued without probable cause. The trial court found he had not done so and granted the motions—a result we affirm in a consolidated appeal. ( Palmbaum v. Morgan, Lewis & Bockius, LLP (A125249/A125891).)
A notice of entry of the trial court's order was filed on or about July 29, 2009, leading to this timely appeal.
An order denying a special motion to strike under section 425.16 is immediately appealable. (§ 425.16, subd. (i); Chabak v. Monroy (2007) 154 Cal.App.4th 1502, 1520.)
DISCUSSION
On appeal, Weinberg challenges the trial court's denial of its special motion to strike on the sole ground that there is no evidence Weinberg acted with malice in prosecuting the set aside action. As a result, Weinberg reasons, Palmbaum cannot demonstrate a probability of prevailing on the merits of his malicious prosecution claim, requiring dismissal of his lawsuit.
I. The Anti-SLAPP Statute (§ 425.16).
Section 425.16 is commonly known as the "anti-SLAPP" statute. It provides in relevant part that "[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 or 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)(1).)
"SLAPP" is an acronym for a strategic lawsuit against public participation. (Navellier v. Sletten (2002) 29 Cal.4th 82, 85, fn. 1 (Navellier), citing Canan & Pring, Strategic Lawsuits Against Public Participation (1988) 35 Soc. Probs. 506.)
When addressing an anti-SLAPP challenge, California courts apply a two-prong test. First, the defendant filing the special motion to strike must make a prima facie showing that the acts that are the subject of the plaintiff's claims were performed in furtherance of the defendant's constitutional right of petition or free speech in connection with a public issue. (Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 67; see § 425.16, subd. (b).) If the moving defendant makes this requisite showing, the burden shifts to the plaintiff to establish, based on competent and admissible evidence, a probability of prevailing on the merits of the plaintiff's claims. (Ibid.; College Hospital Inc. v. Superior Court (1994) 8 Cal.4th 704, 719.) "Only a cause of action that satisfies both prongs of the anti-SLAPP statute—i.e., that arises from protected speech or petitioning and lacks even minimal merit—is a SLAPP, subject to being stricken under the statute." (Navellier, supra, 29 Cal.4th at p. 89.)
"An 'act in furtherance of a person's right of petition or free speech under the United States or California Constitution in connection with a public issue' includes: (1) any written or oral statement or writing made before a legislative, executive, or judicial proceeding, or any other official proceeding authorized by law; (2) any written or oral statement or writing made in connection with an issue under consideration or review by a legislative, executive, or judicial body, or any other official proceeding authorized by law; (3) any written or oral statement or writing made in a place open to the public or a public forum in connection with an issue of public interest; (4) or any other conduct in furtherance of the exercise of the constitutional right of petition or . . . of free speech in connection with a public issue or an issue of public interest." (§ 425.16, subd. (e).)
A malicious prosecution action, by its nature, satisfies the first prong of the anti-SLAPP statute because it necessarily arises from protected activity - to wit, the filing and prosecution of the underlying lawsuit alleged to be malicious. (Jarrow Formulas, Inc. v. LaMarche (2003) 31 Cal.4th 728, 734-735 (Jarrow Formulas); Robinzine v. Vicory (2006) 143 Cal.App.4th 1416, 1421.) As such, we are concerned in this case only with the trial court's application of the second prong of the statute - whether Palmbaum has established a probability of prevailing on his malicious prosecution claim against Weinberg. (§ 425.16, subd. (b).) To satisfy this prong, a plaintiff must "state[] and substantiate[] a legally sufficient claim." ( Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 412.) "Put another way, the plaintiff 'must demonstrate that the complaint is both legally sufficient and supported by a sufficient prima facie showing of facts to sustain a favorable judgment if the evidence submitted by the plaintiff is credited.' [Citations.]" (Jarrow Formulas, at p. 741.) However, the plaintiff need only prove his or her claim has "minimal" merit to survive an anti-SLAPP challenge. ( Id. at p. 738 ["the anti-SLAPP statute requires only 'a minimum level of legal sufficiency and triability' [citation]"]; see also Soukup v. Law Offices of Herbert Hafif (2006) 39 Cal.4th 260, 291 ( Soukup ) .)
In reviewing a trial court's determination that the plaintiff has established a probability of success on the merits, we apply a de novo standard. (City of Cotati v. Cashman (2002) 29 Cal.4th 69, 79.) We consider the pleadings and the evidence offered in support of and in opposition to the anti-SLAPP motion, but do not consider the credibility of witnesses or the weight of the evidence. (Ibid.) In doing so, we pay heed to the legislative purpose underlying the anti-SLAPP statute, which is to promptly dismiss meritless lawsuits designed to chill a defendant's exercise of the constitutionally-protected rights to free speech and petition. (Briggs v. Eden Council for Hope & Opportunity (1999) 19 Cal.4th 1106, 1109; see § 425.16, subd. (a).)
II. Palmbaum's Showing of a Probability of Success on the Merits.
Of course, whether a probability of success on the merits has been established depends on the substantive law governing the plaintiffs action. To demonstrate a probability of prevailing on his malicious prosecution claim, Palmbaum was required to make a prima facie showing of facts supporting each element of malicious prosecution. (See Jarrow Formulas, supra, 31 Cal.4th at p. 741.) As relevant here, to prevail on a cause of action for malicious prosecution, a plaintiff must prove the underlying action brought by the defendant was pursued to a legal termination in the plaintiff's favor, was brought or continued without probable cause, and was brought or continued with malice. (Bertero, supra, 13 Cal.3d at p. 50; see Zamos v. Stroud (2004) 32 Cal.4th 958, 970 (Zamos) ["an attorney may be held liable for malicious prosecution for continuing to prosecute a lawsuit discovered to lack probable cause"].)
In this case, Weinberg does not dispute that the set aside action was terminated in Palmbaum's favor and brought or continued without probable cause; it challenges only the malice element of his claim. In this context, "malice" refers to the "subjective intent or purpose" with which the defendant acted in initiating or maintaining the underlying action against the plaintiff—a question of fact for the jury. ( Sheldon Appel Co. v. Albert & Oliker (1989) 47 Cal.3d 863, 874 ( Sheldon Appel ); Soukup, supra, 39 Cal.4th at p. 296.) "[A]ctual hostility or ill will" toward the plaintiff is not required; malice may also be found where the action is initiated or maintained primarily for an improper purpose, such as for personal gain or satisfaction at the expense of the wrongfully sued defendant. (Albertson v. Raboff (1956) 46 Cal.2d 375, 383 (Albertson), superseded by statute on other grounds, as stated in Palmer v. Zaklama (2003) 109 Cal.App.4th 1367, 1379-1380 (Palmer); Soukup, supra, 39 Cal.4th at p. 296; Downey Venture v. LMI Ins. Co. (1998) 66 Cal.App.4th 478, 498-499 (Downey Venture) ) In other words, "[t]he motive of the defendant must have been something other than that of bringing a perceived guilty person to justice or the satisfaction in a civil action of some personal or financial purpose. [Citation.] The plaintiff must plead and prove actual ill will or some improper ulterior motive." (Downey Venture, at p. 494 (italics omitted); see also Drummond v. Desmarais (2009) 176 Cal.App.4th 439, 451 (Drummond) ["As an element of the tort of malicious prosecution, malice at its core refers to an improper motive for bringing the prior action"].)
We therefore assume for purposes of this appeal that those elements are established.
The California Supreme Court has recognized that a civil action is initiated or maintained for an improper purpose when: "(1) the person initiating [it] 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; [or] (4) the proceedings are initiated for the purpose of forcing a settlement which has no relation to the merits of the claim.' (Rest., Torts, § 676, com. b; see also § 668, com. e.)" (Albertson, supra, 46 Cal.2d at p. 383; see also Sierra Club Foundation v. Graham (1999) 72 Cal.App.4th 1135, 1157.)
"Since parties rarely admit an improper motive, malice is usually proven by circumstantial evidence and inferences drawn from the evidence. [Citation.]" (HMS Capital, Inc. v. Lawyers Title Co. (2004) 118 Cal.App.4th 204, 218 (HMS Capital); see also Daniels v. Robbins (2010) 182 Cal.App.4th 204, 225 (Daniels):)
Palmbaum makes the following showing to support the malice element of his malicious prosecution claim. First, he contends the record demonstrates that Weinberg either knew the set aside action lacked probable cause or was indifferent to whether it was legally tenable. Second, he relies on the notice of lis pendens, contending it was precluded in this case under "well established" law and that it shows the set aside action was brought for the improper purpose of depriving him of the beneficial use of his property. Third, he contends the record supports an inference that Weinberg acted for the improper purpose of shifting the blame away from its own negligence in connection with the foreclosure sale and avoiding malpractice liability. We consider each of these arguments below to decide whether, considered as a whole, they are sufficient to meet the "minimal" evidentiary showing required to survive an anti-SLAPP challenge. (§ 425.16, subd. (b); Jarrow Formulas, supra, 31 Cal.4th at p. 738.)
A. Weinberg's Knowledge of or Indifference to Lack of Probable Cause.
Lack of probable cause—while relevant to the malice issue—is not sufficient in itself to support an inference of malice. ( Downey Venture, supra, 66 Cal.App.4th at p. 498 & fn. 29 ["[B]y itself, the conclusion that probable cause is absent logically tells the trier of fact nothing about the defendant's subjective state of mind"]; see Sheldon Appel, supra, 47 Cal.3d at pp. 885-886 [there is probable cause to bring an action if "any reasonable attorney would have thought the claim tenable"].) "[L]ack of probable cause is a factor that may be considered in determining if the claim was prosecuted with malice [citation], but the lack of probable cause must be supplemented by other, additional evidence." ( HMS Capital, supra, 118 Cal.App.4th at p. 218, citing Downey Venture, at p. 498.)
Notwithstanding these principles, "malice may still be inferred when a party knowingly brings an action without probable cause." (Padres L.P. v. Henderson (2003) 114 Cal.App.4th 495, 522.) "[A] plaintiff acts with malice when he asserts a claim with knowledge of its falsity, because one who seeks to establish such a claim 'can only be motivated by an improper purpose.' [Citation.]" (Drummond, supra, 176 Cal.App.4th at p. 452, italics omitted.) The California Supreme Court also recognizes that malice may be based upon an attorney's indifference in continuing to prosecute an action after facts or law are revealed that demonstrate the action is baseless. ( Zamos, supra, 32 Cal.4th at p. 969; see also Daniels, supra, 182 Cal.App.4th at p. 226.) Thus, "if the trial court determines that the prior action was not objectively tenable, the extent of a defendant attorney's investigation and research may be relevant to . . . whether or not the attorney acted with malice." ( Sheldon Appel, supra, 47 Cal.3d at p. 883.)
Palmbaum relies on these principles to make the requisite showing of malice but offers no direct evidence that Weinberg knew the action was baseless, no evidence of the extent of Weinberg's investigation and research, and, indeed, no evidence that Weinberg participated in the investigation and research of the case at all. He maintains, rather, that the undisputed facts and the controlling law so clearly demonstrated the set aside action's untenability that Weinberg must have either known it lacked probable cause or was indifferent to whether it was tenable. Even assuming Palmbaum is not improperly seeking to draw an inference of malice from lack of probable cause alone, we find no merit in his contentions. Having carefully considered his challenges to Weinberg's legal theories and the factual grounds on which it relied, we do not find the governing law so clear and the evidence so lacking as to permit an inference that Weinberg knew of or was indifferent to a lack of probable cause. (See Sangster v. Paetkau (1998) 68 Cal.App.4th 151, 164-165 [a plaintiff lacks probable cause to pursue litigation "either if he relies upon facts which he has no reasonable cause to believe to be true, or if he seeks recovery upon a legal theory which is untenable under the facts known to him"].) Indeed, in the consolidated appeal, we affirmed the trial court's conclusion as to Weinberg's co-counsel, Edward Mevi, that Palmbaum had not made a prima facie showing of no probable cause for the set aside action, "given the lack of clear legal precedent . . . ." (Palmbaum v. Morgan, Lewis & Bockius, LLP, et al. (A125249/ A125891).) Although Weinberg does not dispute for purposes of this appeal that the set aside action lacked probable cause, our analysis in the consolidated appeal demonstrates, at a minimum, that the action was not so clearly untenable as to permit an inference that Weinberg must have known, or did not care, that it had no merit.
Weinberg appears in the captions of the operative complaint of the set aside action, the notice of lis pendens, and PTF's opposition to summary judgment, but did not sign any of these documents. Co-counsel Edward Mevi signed them all for the Stanton firm.
Palmbaum asserted substantially similar arguments against Mevi in the consolidated appeal, and Palmbaum's counsel conceded at oral argument that our affirmance of the trial court's finding of probable cause in the consolidated appeal would undercut his case and "have a material impact on this appeal."
B. Recording a Notice of Lis Pendens.
"[E]vidence a lis pendens was recorded may be admissible to prove malice . . . ." (Palmer, supra, 109 Cal.App.4th at p. 1379; Albertson, supra, 46 Cal.2d at pp. 382-383.) As Weinberg correctly notes, however, a lis pendens simply provides notice to potential purchasers of pending litigation involving the subject property. (Palmer, supra, at p. 1375 [" 'The purpose of a lis pendens is to give constructive notice of an action affecting real property to persons who subsequently acquire an interest in that property, so that the judgment in the action will be binding on such persons . . .' "].) This process is subject to abuse, as a lis pendens "clouds the title and effectively prevents the property's transfer until the litigation is resolved or the lis pendens is expunged." ( BGJ Associates v. Superior Court (1999) 75 Cal.App.4th 952, 967; Nash v. Superior Court (1978) 86 Cal.App.3d 690, 700 ["[t]he oppressive quality of a notice of any lis pendens is obvious"].) Nonetheless, the lis pendens " 'is purely incidental to the action wherein it is filed. It refers specifically to such action and has no existence apart from it.' " ( Albertson, supra, 46 Cal.2d at p. 379.) As case law holds that lack of probable cause is not enough alone to demonstrate malice, the filing of a lis pendens giving notice of such an action also is not sufficient, where the action asserts "a real property claim." (See § 405.20 ["A party to an action who asserts a real property claim may record a notice of pendency of action in which that real property claim is alleged"].)
Palmbaum contends, however, that the lis pendens was not permitted in these circumstances, apparently seeking an inference that Weinberg knew or did not care that it was untenable. He maintains the law was well-established that it was not appropriate to record notice of lis pendens "merely to obtain secured creditor status," and contends the lis pendens on parcel 007 "was not based upon any right or claim in the real property, but, rather, was an attempt to obtain a resale of the property to either allow [PTF] to timely [submit a ] creditor's bid to recover the property as collateral for the debt, or to increase the sale price to reduce PTF's loan losses." Again, even assuming Palmbaum is not improperly seeking to draw an inference of malice from lack of probable cause alone, this contention has no merit. PTF was already a secured creditor; Weinberg brought the set aside action to set aside the foreclosure sale conducted to satisfy that security interest. (Compare Urez Corp. v. Superior Court (1987) 190 Cal.App.3d 1141, 1149 [holding that an action seeking reinstatement or creation of a beneficial interest in property for the purpose of securing payment of money owed under a defunct second trust deed did not "affect[] title or possession of the subject property," noting the plaintiffs purported interest "does not go to legal title or possession of the subject property" and that he "does not seek recision [sic] of the foreclosure sale or conveyance of the subject property to himself']; Albertson, supra, 46 Cal.2d at p. 383 [allowing plaintiff to allege "that defendant's purpose in falsely asserting an interest in the property and filing the lis pendens was to secure the benefit of an attachment to secure the payment of the money judgment without incurring the burdens thereof"].)
Palmbaum also contends: "Weinberg's filing of a lis pendens to encumber parcel - 007 was a 'hallmark' of malice." (See Albertson, supra, 46 Cal.2d at p. 383 [" '[P]roceedings . . . initiated solely for the purpose of depriving the person against whom they are initiated of a beneficial use of his property' is a 'hallmark' of malice," citing the Restatement of Torts in identifying " 'the principal situations in which the civil proceedings are initiated for an improper purpose . . . ."].) This argument begs the question, as its conclusion that Weinberg acted with malice is based on an assumed premise that it filed the lis pendens solely to deprive Palmbaum of the beneficial use of the property. In other words, in concluding Weinberg brought the action for an improper purpose, Palmbaum assumes Weinberg filed the lis pendens for an improper purpose. He argues that the relief sought in the set aside action demonstrates that it was "solely intended to deprive" him of parcel 007. We disagree. The operative complaint in the set aside action sought a determination that the foreclosure sale was invalid and that Palmbaum had no interest in parcel 007, and injunctive relief preserving the status quo until the parties' rights could be determined. This pleading gives no indication that Weinberg's subjective intent in seeking such relief was improper. Indeed, Palmbaum's analysis would permit an inference of an improper purpose in every action in which the right to possession or title to real property is at issue, and a finding of malice in every case in which a lis pendens is recorded. (See §§ 405.20, 405.4 [" '[R]eal property claim' means the cause or causes of action in a pleading which, if meritorious, affect . . . title to, or the right to possession of, specific real property . . ."].)
C. Pursuing Litigation to Avoid Malpractice Liability.
Finally, Palmbaum contends the record supports an inference that Weinberg brought the set aside action for an improper purpose: to avoid liability for malpractice in connection with PTF's failure to bid at the foreclosure sale. He contends: "From the potential liability exposure facing Weinberg at the time of initiating the underlying set aside action, and throughout the prosecution of that litigation, one certainly could infer that Weinberg's motive for pursuing the same [was] less (if at all) to pursue a meritorious claim than an attempt to extricate itself from such an onerous burden . . . ." In support of these contentions, Palmbaum relies on: (1) an alleged tolling agreement between PTF and Weinberg preserving PTF's right to bring legal action against Weinberg in connection with the foreclosure sale; (2) the allegations in an unverified complaint PTF filed in March 2006, alleging malpractice against Weinberg and others in connection with the foreclosure sale; and (3) an order of a federal district court deciding motions to dismiss, motions to strike, and motions for more definite statement in an action against Weinberg and others alleging mismanagement of PTF investments.
Palmbaum failed to meet his burden. First, he did not identify any admissible evidence in the record to support his contention that Weinberg pursued the set aside action to avoid malpractice liability. "Unlike demurrers or motions to strike, which are designed to eliminate sham or facially meritless allegations, at the pleading stage a SLAPP motion, like a summary judgment motion, pierces the pleadings and requires an evidentiary showing." (Simmons v. Allstate Ins. Co. (2001) 92 Cal.App.4th 1068, 1073, italics omitted; accord, Roberts v. Los Angeles County Bar Assn. (2003) 105 Cal.App.4th 604, 613.) "[T]he plaintiff cannot rely on the allegations of the complaint, but must produce evidence that would be admissible at trial. [Citation.]" (HMS Capital, supra, 118 Cal.App.4th at p. 212; Nguyen-Lam v. Cao (2009) 171 Cal.App.4th 858, 866-867; accord, Martin v. Inland Empire Utilities Agency (2011) 198 Cal.App.4th 611, 630.) The tolling agreement purportedly notifying Weinberg of a potential malpractice claim against it does not appear in the record, and the allegation in PTF's malpractice complaint that "[t]olling agreements were entered into between the PTF . . . and [Weinberg] effective February 22, 2004," is not evidence of such an agreement. Allegations set forth in an unverified complaint do not amount to admissible evidence of the facts alleged, and, unless principles of res judicata or collateral estoppel apply, neither do the factual findings of a court in separate litigation. Accordingly, none of the sources on which Palmbaum relies provides admissible evidence of an improper purpose.
The record citation Palmbaum provides relates to a tolling agreement between PTF and its asset manager, McMorgan & Company. Weinberg approved this agreement as counsel for PTF but was not a party to it.
At oral argument, Palmbaum's counsel disputed this point, contending these materials constitute evidence of malice because he had asked the trial court to take judicial notice of these court records. Assuming this request was granted, only the existence of these records was judicially noticed, not the truth of the facts they assert. (Sosinsky v. Grant (1992) 6 Cal.App.4th 1548, 1566-1567 [court may take judicial notice that a complaint made certain allegations but not that those allegations are true, as the truth of hearsay allegations may not be judicially noticed simply because they are part of a court file]; see id. at p. 1566 ["facts" in an appellate opinion are not subject to judicial notice].) Thus, in this case, judicial notice of court records from PTF's malpractice suit and the federal litigation provides evidence only that PTF filed a complaint on March 30, 2006, alleging particular facts, and that the federal district court issued a particular order in another case. To the extent these materials show Weinberg's awareness of potential malpractice liability, they fail to demonstrate that Weinberg prosecuted the set aside action to avoid such liability. The malpractice complaint was filed two years after the set aside action and almost two months after Weinberg's participation in that litigation ended.
There is no indication in the record that the trial court ruled on Palmbaum's request.
By March 2006, Weinberg was no longer attorney of record in the set aside action. As discussed above, statements in the district court's order suggesting Weinberg continued to participate in the litigation after filing substitutions of counsel do not constitute admissible evidence of that fact.
In any case, Palmbaum simply assumes that an attorney necessarily acts for an improper purpose when he uses the judicial system to correct a mistake and mitigate his liability for malpractice. (See Drummond, supra, 176 Cal.App.4th at p. 452 [improper purpose to misuse the judicial system "for something other than to enforce legitimate rights and to secure remedies to which the claimant may tenably claim entitlement"].) Even if Palmbaum had presented evidence of a tolling agreement between PTF and Weinberg or a malpractice claim that was filed during Weinberg's representation of PTF, these materials would not establish the validity of the claims against Weinberg or permit an inference regarding Weinberg's motivation in pursuing the set aside litigation on PTF's behalf. They would serve only to invite improper speculation as to Weinberg's subjective intent.
No evidence in the record indicates that Weinberg was required to be present at the foreclosure sale or was otherwise negligent. PTF premised its malpractice action against Weinberg on an agency theory, but no evidence in the record supports this allegation.
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We hold, accordingly that the trial court erred in concluding that Palmbaum's showing of malice was sufficient to withstand a special motion to strike (§ 425.16).
DISPOSITION
The trial court's order denying Weinberg's anti-SLAPP motion is reversed. The matter is remanded to the trial court with directions to enter an order granting the motion and dismissing the action. Weinberg shall recover its costs on appeal.
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Jenkins, J.
We concur:
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McGuiness, P. J.
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Pollak, J.