Brennan v. Tremco Inc.

92 Cal. Rptr. 2d 821, 78 Cal. App. 4th 391
CourtCalifornia Court of Appeal
DecidedJune 21, 2000
DocketB125398
StatusPublished

This text of 92 Cal. Rptr. 2d 821 (Brennan v. Tremco Inc.) is published on Counsel Stack Legal Research, covering California Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Brennan v. Tremco Inc., 92 Cal. Rptr. 2d 821, 78 Cal. App. 4th 391 (Cal. Ct. App. 2000).

Opinion

92 Cal.Rptr.2d 821 (2000)
78 Cal.App.4th 391

Walter M. BRENNAN, Plaintiff and Appellant,
v.
TREMCO INCORPORATED et al., Defendants and Respondents.

No. B125398.

Court of Appeal, Second District, Division Three.

February 18, 2000.
As Modified February 23 and February 29, 2000.
Review Granted June 21, 2000.

*822 Grace & Sater LLP, Michael K. Grace and Gregory J. Sater, Los Angeles, under appointment by the Court of Appeal; Greenberg, Glusker, Fields, Claman & Machtinger and Stephen S. Smith, Los Angeles, for Plaintiff and Appellant.

Brobeck, Phleger & Harrison, Los Angeles, Lawrence J. Gornick, San Francisco, Edward D. Totino, Los Angeles, and Aaron P. Sonnhalter, for Defendants and Respondents.

SCHNEIDER, J.[*]

In 1992 defendant and respondent Tremco Incorporated sued plaintiff and appellant Walter M. Brennan. (This lawsuit shall be hereinafter referred to as "the Underlying Action.") Brennan was a former employee of Tremco, who went to work for one of Tremco's competitors.[1] After the Underlying Action had been litigated for three years, Brennan obtained summary adjudication on Tremco's causes of action for conversion and misappropriation of trade secrets. Thereafter, the parties *823 agreed to arbitrate Tremco's remaining claims. Ultimately, the arbitrator ruled in Brennan's favor on these remaining claims. The court confirmed the arbitration award and entered judgment in favor of Brennan.

Brennan then filed a malicious prosecution action against Tremco in which he alleged the Underlying Action had terminated completely in his favor. (Brennan's action shall hereinafter be referred to as "the Malicious Prosecution Action.") While the Malicious Prosecution Action was pending, Sagonowsky v. More (1998) 64 Cal.App.4th 122, 75 Cal.Rptr.2d 118 was decided.[2] Based upon that case, Tremco filed a demurrer to Brennan's first amended complaint. The gravamen of this demurrer was that the agreement to arbitrate entered into by Tremco and Brennan barred Brennan's cause of action for malicious prosecution. Based on Sagonowsky the trial court sustained Tremco's demurrer without leave to amend and thereafter entered a judgment of dismissal.[3] This appeal followed.

DISCUSSION

Malicious Prosecution Law

"To establish a cause of action for the malicious prosecution of a civil proceeding, a plaintiff must plead and prove that the prior action (1) was commenced by or at the direction of the defendant and was pursued to a legal termination in his, plaintiff's, favor [citations]; (2) was brought without probable cause [citations]; and (3) was initiated with malice [citations]." (Bertero v. National General Corp. (1974) 13 Cal.3d 43, 50, 118 Cal.Rptr. 184, 529 P.2d 608.) In the present case the court did not sustain Tremco's demurrer without leave to amend because any of these elements had not been pled. Rather, the demurrer was sustained because the trial court concluded, based on Sagonowsky v. More, supra, that a private arbitration cannot be the basis of a malicious prosecution action. We must decide whether Sagonowsky applies to the facts of this case and, if it does, whether we should adopt the rationale of that decision. We must also decide whether the trial court correctly sustained the demurrers of the individual defendants, Miller and McOwan. "Our task in reviewing a judgment of dismissal following the sustaining of such a demurrer [without leave to amend] is to determine whether the complaint states, or can be amended to state, a cause of action. For that purpose we accept as true the properly pleaded material factual allegations of the complaint, together with facts that may properly be judicially noticed. [Citations.]" (Crowley v. Katleman (1994) 8 Cal.4th 666, 672, 34 Cal. Rptr.2d 386, 881 P.2d 1083.)

Sagonowsky v. More

In Sagonowsky the parties entered into an agreement that contained a commercial contractual arbitration provision. This agreement provided that "[a]ny dispute or claim in law or equity arising out of this contract or any resulting transaction shall be decided by neutral binding arbitration...." (Sagonowsky v. More, supra, 64 Cal.App.4th at p. 125, fn. 1, 75 Cal. Rptr.2d 118.) The agreement specifically excepted certain proceedings from the arbitration *824 agreement. After the arbitration successfully terminated in her favor, Sagonowsky (and two others) filed a malicious prosecution action against More, the attorney who had represented the opposing party in the arbitration proceeding. After the trial court sustained Move's demurrer without leave to amend on the ground, inter alia, that "[p]rimarily ... where the parties have come together by contract ... to submit disputes to arbitration as opposed to litigation ... malicious prosecution should not be available to a successful defendant in such an arbitration proceeding" (id., at p. 127), Sagonowsky appealed.

In affirming the trial court's judgment, the Sagonowsky court stated:

"In contrast appellants expressly contracted for private arbitration and defined the scope of disputes subject to that arbitration broadly, but expressly acknowledged that certain limited avenues of action in court would still be open to them....

"The significance of such provisions is that the parties sought to limit quite narrowly the circumstances in which they would seek a judicial remedy. It was certainly possible for them to have agreed to subject themselves to liability in the courts for malicious prosecution of an arbitration (or to have provided for a costs or sanction award by the arbitrator for a baseless claim); however, they made no such agreement here.... In short, the intent of the parties as expressed in both agreements was to strictly limit recourse to judicial remedies and submit `any dispute' regarding each agreement to private arbitration.

"Appellants urge us to insert into the agreement to arbitrate any dispute the added requirement that the dispute be a `colorable claim' or a `bona fide' claim. We decline to rewrite the agreement entered into by the parties. These parties were not impeded from agreeing to submit only colorable or bona fide claims to arbitration, nor from including in their agreement a provision for a fee award or sanction to be imposed by the arbitrator for claims found not to be colorable or bona fide. They did not do so. Having chosen in their agreement to arbitrate not to foreclose the risk that they might bear the cost of an arbitration which terminated in their favor on a claim without merit, appellants cannot expect this court to rewrite that agreement.

"Accordingly, on these facts we find the trial court did not err in sustaining the demurrer to the cause of action for malicious prosecution on the basis that the private, contractual arbitration which terminated in their favor was not a `prior action' of the sort which will support such a claim." (Sagonowsky v. More, supra, 64 Cal.App.4th at pp. 133-134, 75 Cal.Rptr.2d 118.)

SAGONOWSKY AND THE PRESENT CASE

Based on a plain reading of the Sagonowsky opinion, it is clear that decision does not stand for the proposition that a private arbitration proceeding can never be the basis of a malicious prosecution action.

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Cite This Page — Counsel Stack

Bluebook (online)
92 Cal. Rptr. 2d 821, 78 Cal. App. 4th 391, Counsel Stack Legal Research, https://law.counselstack.com/opinion/brennan-v-tremco-inc-calctapp-2000.