DLCC Corp. v. Chulak CA2/7

CourtCalifornia Court of Appeal
DecidedJune 23, 2014
DocketB251007
StatusUnpublished

This text of DLCC Corp. v. Chulak CA2/7 (DLCC Corp. v. Chulak CA2/7) 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
DLCC Corp. v. Chulak CA2/7, (Cal. Ct. App. 2014).

Opinion

Filed 6/23/14 DLCC Corp. v. Chulak CA2/7 NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION SEVEN

DLCC CORPORATION, B251007

Plaintiff and Appellant, (Los Angeles County Super. Ct. No. BC497177) v.

MICHAEL T. CHULAK et al.,

Defendants and Respondents.

APPEAL from a judgment of the Superior Court of Los Angeles County, Debre K. Weintraub, Judge. Affirmed. Law Offices of James T. Stroud and James T. Stroud for Plaintiff and Appellant DLCC Corporation. Chulak & Perez and Gary M. Schumacher for Defendants and Respondents Michael T. Chulak and Michael T. Chulak & Associates.

_______________________ This appeal arises from a malicious prosecution action brought by appellant DLCC Corporation (DLCC) against respondents Michael T. Chulak and his law firm, Michael T. Chulak & Associates (collectively, Chulak). On behalf of his client, Chulak filed a lawsuit against DLCC, asserting three causes of action for accounting, negligence, and breach of fiduciary duty. While the first lawsuit was pending, Chulak filed a second lawsuit against DLCC and two other defendants, which asserted the same three causes of action against DLCC based on the same factual allegations. The trial court sustained a demurrer brought by DLCC in the second lawsuit and dismissed with prejudice each of cause of action alleged against DLCC in that second suit. DLCC then filed this malicious prosecution action against Chulak and his client, alleging that the second lawsuit was brought with malice and without probable cause and was terminated in DLCC’s favor. The trial court granted Chulak’s special motion to strike the malicious prosecution complaint pursuant to Code of Civil Procedure1 section 425.16, and DLCC now appeals that ruling. For the reasons set forth below, we affirm.

FACTUAL BACKGROUND AND PROCEDURAL HISTORY I. The First Lawsuit Filed Against DLCC Michael Chulak is an attorney representing the Alhambra Gardens Homeowners Association. On February 22, 2012, acting on behalf of the Homeowners Association, Chulak filed a civil action against DLCC in Los Angeles County Superior Court (Case No. GC048960) (“the first lawsuit”). The first lawsuit asserted three causes of action against DLCC for accounting, negligence, and breach of fiduciary duty. The complaint specifically alleged that DLCC was hired to manage the day-to-day affairs of the Alhambra Gardens condominium complex in July 2007, and that it terminated its business relationship with the complex in December 2011. It further alleged that DLCC failed to adequately maintain the premises and to make necessary repairs during its

1 Unless otherwise stated, all further statutory references are to the Code of Civil Procedure.

2 management of the property, and refused to provide the Homeowners Association with records and an accounting of all funds received at the termination of its services. The complaint sought an order requiring DLCC to provide a full accounting of all services rendered and funds received during its management of the property, to turn over any remaining funds belonging to the Homeowners Association, and to pay compensatory damages in an amount to be determined at trial.

II. The Second Lawsuit Filed Against DLCC On April 3, 2012, while the first lawsuit was pending, Chulak filed a second civil action on behalf of the Homeowners Association in Los Angeles County Superior Court (Case No. GC049223) (“the second lawsuit”). The second lawsuit named DLCC, Alhambra Garden Estate LLC, and David Chen as defendants and asserted a total of nine causes of action. The complaint alleged that Alhambra Garden Estate was the developer of the condominium complex, that Chen was the operating officer of both DLCC and Alhambra Garden Estate, and that Chen and Alhambra Garden Estate hired DLCC to manage the day-to-day affairs of the complex. The first three causes of action in the second lawsuit were for accounting, negligence, and breach of fiduciary duty and contained, almost verbatim, the same factual allegations as the three causes of action asserted against DLCC in the first lawsuit. The remaining six causes of action were against Chen and Alhambra Garden Estate only and were based on common allegations that these defendants should have known of certain construction defects in the complex but failed to make necessary repairs or to maintain sufficient funds to provide for the proper management and operation of the property. The complaint in the second lawsuit sought the same relief as the first. On June 12, 2012, James T. Stroud, an attorney for DLCC, sent Chulak a letter in which he pointed out that Chulak had “filed a second lawsuit based on the same facts and persons” and asked him to voluntarily dismiss that suit. Stroud also warned Chulak that “appropriate action [would] be taken” against him and his client without further notice if

3 the second suit was not promptly dismissed. Chulak refused, however, to dismiss any causes of action alleged in either the first or second lawsuits. In late June 2012, DLCC filed a demurrer to the three causes of action alleged against it in the second lawsuit. The trial court sustained DLCC’s demurrer to each of these causes of action without leave to amend, and on September 13, 2012, entered an order in the second lawsuit dismissing these three causes of action with prejudice.2 The causes of action alleged against DLCC in the first lawsuit remained pending before the trial court. The first and second lawsuits were later consolidated for purposes of trial and currently are set for trial in August 2014.3

III. DLCC’s Malicious Prosecution Action On December 11, 2012, DLCC filed this malicious prosecution action against Chulak, the Homeowners Association, and two of the association’s managing officers. DLCC’s malicious prosecution complaint alleged, in pertinent part, that Chulak had commenced and prosecuted the second lawsuit without probable cause because no reasonable attorney would file two separate lawsuits against the same party alleging the same causes of action. It further alleged that Chulak maliciously had filed the second lawsuit to financially harm DLCC by forcing it to defend against two separate actions and to improperly coerce DLCC into settlement. The complaint sought both compensatory and punitive damages. On March 28, 2013, Stroud sent Chulak a letter regarding the pending malicious prosecution action in which he asserted that Chulak had created an irreconcilable conflict

2 In response to the second lawsuit, DLCC also filed a cross-complaint against the Homeowners Association and Chulak for declaratory relief and abuse of process. They in turn filed a demurrer to the cross-complaint, which the trial court sustained without leave to amend. 3 Pursuant to Evidence Code section 452, subdivision (d), we grant DLCC’s request for judicial notice of a subsequent minute order entered by the trial court in the first and second lawsuits setting both actions for a trial by jury on August 18, 2014.

4 of interest with the Homeowners Association by maliciously pursuing the second lawsuit. Stroud also advised Chulak that he intended bring a motion to disqualify counsel on behalf of DLCC if Chulak did not withdraw from his representation of the Homeowners Association in the first and second lawsuits.

IV. Chulak’s Special Motion to Strike the Malicious Prosecution Complaint On April 12, 2013, Chulak brought a special motion to strike DLCC’s malicious prosecution complaint pursuant to section 425.16.

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DLCC Corp. v. Chulak CA2/7, Counsel Stack Legal Research, https://law.counselstack.com/opinion/dlcc-corp-v-chulak-ca27-calctapp-2014.