Filed 2/28/13 Maraziti v. Stone CA4/1
NOT TO BE PUBLISHED IN OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
RICHARD J. MARAZITI et al., D059749
Plaintiffs and Appellants,
v. (Super. Ct. 37-2010-00099817-CU- PO-CTL) DAVID A. STONE, JR.,
Defendant and Respondent.
APPEAL from an order of the Superior Court of San Diego County, Ronald S.
Prager, Judge. Affirmed.
Richard J. Maraziti and Signature Log Homes, LLC (Signature, together with
Maraziti, Plaintiffs) entered into a joint venture with David A. Stone, Jr. whereby they
agreed to build log cabins on five unimproved lots owned by Stone in Big Bear,
California. In the underlying action, Plaintiffs filed a complaint against Stone for
amounts allegedly due under the agreement. Stone filed a cross-complaint alleging, among other things, that Plaintiffs overcharged him for construction costs. Both sides
failed to prevail on their respective claims.
Plaintiffs filed this action for malicious prosecution against Stone based on his
prosecution of the cross-complaint. Plaintiffs appeal from an order granting Stone's
special motion to strike their complaint under Code of Civil Procedure section 425.16,
the anti-SLAPP (strategic lawsuit against public participation) statute. (All undesignated
statutory references are to the Code of Civil Procedure.) Plaintiffs contend the trial court
erred in granting the anti-SLAPP motion because they established a lack of probable
cause existed to file and prosecute the cross-complaint. They also argue that the trial
court erred in refusing to lift the discovery stay to conduct discovery on the issue of
probable cause. We reject their contentions and affirm the order granting the motion to
strike.
FACTUAL AND PROCEDURAL BACKGROUND
Plaintiffs instigated the underlying action against Stone for amounts allegedly due
under their contract. The trial court sustained Stone's demurrer to Plaintiffs' operative
complaint on the ground Plaintiffs were unlicensed contractors and thus precluded from
any recovery. Plaintiffs appealed from the judgment of dismissal and the appellate court
affirmed.
Stone's operative cross-complaint against Plaintiffs alleged causes of action for
breach of contract, fraud, breach of the covenant of good faith and fair dealing, and for
money had and received. Among other things, Stone alleged that Plaintiffs failed to
timely complete the log cabins and that he paid for materials and services used on third-
2 party projects. Stone also claimed that Maraziti and Signature were alter egos such that
Signature's debts and liabilities should be treated as the debts and liabilities of Maraziti.
The cross-complaint proceeded to trial without a jury and the trial court rendered a
lengthy statement of decision finding that Stone would take nothing.
Briefly, the trial court concluded that Stone provided no proof that Maraziti was
the alter ego of Signature and stated it would decide whether Stone was entitled to any
recovery against Signature. After reviewing the evidence, the underlying trial court
found that any documents fabricated by Stone did not impact the litigation and that Stone
believed the validity of his claims. It concluded, however, that Stone was not entitled to
any recovery because he failed to provide a qualified accounting of his profits and losses
under the contract.
Plaintiffs then filed the instant action for malicious prosecution against Stone and
his underlying attorneys. The underlying attorneys filed an anti-SLAPP motion and
Stone filed a joinder to that motion. The trial court denied Plaintiffs' ex parte application
for relief from the anti-SLAPP statute's automatic discovery stay (§ 425.16, subd. (g))
and for a continuance of the hearing date. After ruling on numerous evidentiary
objections, the trial court granted the anti-SLAPP motion and issued a judgment in favor
of Stone and his underlying attorneys. Plaintiffs timely appealed, but later dismissed the
appeal as to Stone's underlying attorneys.
3 DISCUSSION
I. Burden of Proof and Standard of Review
A special motion to strike under section 425.16 allows a defendant to gain early
dismissal of a lawsuit that qualifies as a SLAPP. (§ 425.16, subd. (a).) In ruling on an
anti-SLAPP motion, the trial court must first decide whether the moving defendant has
made a prima facie showing that the plaintiff's suit is subject to section 425.16, i.e., that
the challenged claims arise from an act or acts in furtherance of his or her right of petition
or free speech. (§ 425.16, subd. (b)(1); Equilon Enterprises v. Consumer Cause, Inc.
(2002) 29 Cal.4th 53, 67 (Equilon).) If the defendant establishes the anti-SLAPP statute
applies, the burden shifts to the plaintiff to demonstrate a "probability" of prevailing on
the claim. (Equilon, supra, 29 Cal.4th at p. 67.) In making that determination, the court
must "consider the pleadings, and supporting and opposing affidavits stating the facts
upon which the liability or defense is based." (§ 425.16, subd. (b)(2).) "The evidence
submitted by the plaintiff must be admissible [citation], and, if credited at trial, must
support a judgment in his favor. [Citations.] Significantly, the trial court cannot and
does not weigh the moving party's evidence against the opposing party's evidence, but
addresses the factual and legal issues as in a motion for summary judgment. [Citation.]
If the opposing party fails to make the requisite showing, the motion must be granted.
[Citation.]" (Slaney v. Ranger Ins. Co. (2004) 115 Cal.App.4th 306, 318.) We review de
novo the trial court's rulings on an anti-SLAPP motion. (Thomas v. Quintero (2005) 126
Cal.App.4th 635, 645.)
4 II. Analysis
A. Stone's Request to Disregard Portions of Plaintiffs' Opening Brief
Stone argues that we should disregard Plaintiffs' statement of the case because it
consists of argument, rather than a fair summary of the facts. The opening brief is
required to " '[p]rovide a summary of the significant facts' " in the record, including "all
the significant facts, not just those beneficial to the appellant." (In re S.C. (2006) 138
Cal.App.4th 396, 402; Cal. Rules of Court, rule 8.204(a)(2)(C).) Plaintiffs' statement of
the case does not conform to this requirement; however, we exercise our discretion to
disregard the noncompliance. (Cal. Rules of Court, rule 8.204(e)(2)(C).)
Stone also contends we should disregard Plaintiffs' arguments because they are
supported by string cites to hundreds of pages of the record. "It is the duty of a party to
support the arguments in its briefs by appropriate reference to the record, which includes
providing exact page citations." (Bernard v. Hartford Fire Ins. Co. (1991) 226
Cal.App.3d 1203, 1205.) We are unable to adequately evaluate which facts Plaintiffs
believe support their position because they have provided us with block page references.
(Spangle v. Farmers Ins. Exchange (2008) 166 Cal.App.4th 560, 564, fn. 3.) Instead of
striking the brief, however, we have chosen to disregard the defects and consider the brief
as if it were properly prepared. (Cal. Rules of Court, rule 8.204(e)(2)(C).)
B. Probability of Prevailing
Plaintiffs do not challenge the trial court's conclusion that their malicious
prosecution claim fell within the purview of the anti-SLAPP statute. (Jarrow Formulas,
Inc. v. LaMarche (2003) 31 Cal.4th 728, 735 (Jarrow).) Accordingly, we decide whether
5 Plaintiffs presented evidence sufficient to "[establish] that there is a probability that
[they] will prevail on the claim." (§ 425.16, subd. (b)(1).)
To establish their claim for malicious prosecution, Plaintiffs were required to show
that a prior claim initiated by Stone was (1) pursued to a legal termination favorable to
the Plaintiffs, (2) brought without probable cause, and (3) initiated with malice. (Villa v.
Cole (1992) 4 Cal.App.4th 1327, 1335.) Here, trial on Stone's cross-complaint resulted
in a legal termination favorable to Plaintiffs. Thus, we examine whether Stone filed and
prosecuted the cross-complaint without probable cause.
A party has probable cause to bring the underlying suit if, objectively viewed, its
claims were legally tenable, meaning a reasonable attorney would conclude that the
underlying action was not totally and completely without merit. (Sheldon Appel Co. v.
Albert & Oliker (1989) 47 Cal.3d 863, 885 (Sheldon Appel).) However, "every case
litigated to a conclusion has a losing party, but that does not mean the losing position was
not arguably meritorious when it was pled. [Citation.] And just as an action that
ultimately proves nonmeritorious may have been brought with probable cause,
successfully defending a lawsuit does not establish that the suit was brought without
probable cause. [Citations.]" (Jarrow, supra, 31 Cal.4th at p. 743.) Whether there was
probable cause to initiate or continue to prosecute an action in light of the facts known to
the malicious prosecution defendant is a legal question for the court to decide. (Sheldon
Appel, supra, 47 Cal.3d at p. 875.) As we shall explain, Plaintiffs failed to show a
probability of prevailing on the lack of probable cause element of their malicious
prosecution claim.
6 As a threshold matter, we reject Stone's argument that probable cause existed as a
matter of law because the underlying trial court denied Plaintiffs' motion for summary
adjudication of Stone's cross-complaint. Stone is correct that the denial of a summary
judgment motion in the underlying case can provide persuasive evidence that a suit does
not totally lack merit. (Roberts v. Sentry Life Insurance (1999) 76 Cal.App.4th 375, 383.)
Here, the trial court's ruling shows it never examined the separate statements to determine
whether triable issues of material fact existed. Rather, the trial court denied the motion
on the technical ground that it could not summarily adjudicate the ten items listed in the
motion under the version of the summary judgment statute that existed at that time.
Accordingly, the denial of Plaintiffs' request to summarily adjudicate Stone's cross-claims
in the underlying case is not a reliable indicator that probable cause existed.
Plaintiffs claim that Stone filed and prosecuted the cross-complaint without
probable cause because he used fabricated documents to support his claims. Plaintiffs'
argument, however, is conclusory as they failed to explain how any specific fabricated
document impacted the litigation. In any event, the factual findings by the trial court
show that any fabricated documents had no impact on the litigation.
In its statement of decision in the underlying action, the trial court noted that
Maraziti presented the testimony of David Olekslow, a questioned document examiner.
Olekslow testified that Stone "appeared to have" manipulated some e-mails, but the trial
court found "[t]he effect of this so-called manipulation was marginal in the scheme of
things." With regard to " 'Sub-Rider A,' " Olekslow opined that it had never been attached
to the principal agreement. The trial court concluded, however, that the significance of
7 Sub-Rider A was "collateral to the dispute" between the parties. Finally, the trial court
found that the spreadsheets Stone offered to prove his expenditures and Olekslow's
testimony that some of the spreadsheet entries "may have been duplications" to be
unimportant because Stone testified that the spreadsheets were " 'working documents' "
and that he could not attest to their correctness.
Plaintiffs next claim that Stone continued to prosecute the cross-complaint or a
portion of the cross-complaint without probable cause and without evidence justifying his
claims. Specifically, Plaintiffs note that Stone initially requested over $3 million in
damages, that Stone reduced the damage claim just before trial, and the trial court
ultimately found that only $12,000 was at issue. Plaintiffs claim that Stone maliciously
prosecuted $3 million in damages up until the moment he abandoned the claim. Plaintiffs
cite the reduction in damages and Citi-Wide Preferred Couriers, Inc. v. Golden Eagle Ins.
Corp. (2003) 114 Cal.App.4th 906 (Citi-Wide) to support their assertion that Stone lacked
probable cause to continue prosecuting the cross-complaint because his damage claims
were fabricated.
In Citi-Wide, the court held that a malicious prosecution suit may be maintained
where most but not all of the amount sought in a prior action was claimed without
probable cause. (Citi-Wide, supra, 114 Cal.App.4th at p. 914.) In that case, an insurer
sued its insured for $7,861 in alleged unpaid premiums but then admitted that only
$1,900 was owed. (Id. at p. 909.) Ignoring its admission, the insurer offered to settle for
$7,900 several days before trial. (Ibid.) On the day of trial, the insurer dismissed the
action with prejudice and signed a stipulation stating that the premiums had in fact been
8 fully paid. (Id. at p. 910.) On these facts, the appellate court concluded that the trial
court improperly granted the insurer's in limine motion to preclude the insured from
presenting any evidence at trial that the insurer lacked probable cause to prosecute the
underlying action. (Id. at p. 914.) The appellate court reasoned that the insured had a
right to have a trier of fact resolve the question of the insurer's knowledge or belief in the
validity of its claims. (Id. at p. 913.)
The instant action is distinguishable. In response to form interrogatories, Stone
claimed $1,527,455 in damages to personal property based on loss of material taken from
job sites, labor fictitiously filed for lots 205 to 207, and damage to "[w]ater meters,
cabinets, windows, stairway, thru bolts." Stone claimed that he lost total income of
$1,527,455 based on, among other things, the amounts overpaid and overbilled. Finally,
he claimed $1.6 million in other damages based on loss of anticipated net profit on lots
202 and 203. Plaintiffs presented no evidence showing that these damage requests were
false or that Stone made the claims believing they were false. In contrast, Stone
substantiated part of his claims with loss of profit and loss of income calculations for lots
206 and 207.
The trial court commented in its statement of decision that Stone initially sought
about $3 million in damages and that he reduced his claim to about $46,700 before trial.
However, it also noted that both parties "engaged in considerable discovery in
preparation for trial" and presented a "staggering" amount of documentation. The trial
court, however, declined to find Plaintiffs liable under the contract because Stone failed
"to provide a qualified accounting" of the contract profits or losses. Unlike Citi-Wide,
9 Stone presented voluminous evidence to support his claim, but lost because he failed to
present an accounting. Additionally, although the trial court denied Stone any recovery
under the cross-complaint, it found that "Stone believe[d] he paid monies for items which
he says he already paid Maraziti." These findings show that probable cause existed to
file the cross-complaint.
Plaintiffs assert that Stone's claims for lost profits were not recoverable under the
contract. To support this assertion, Plaintiffs cite the Miller and Starr treatise that an
owner's measure of damages when a contractor breaches a construction contract is the
difference between the balance due on the construction contract and the cost of
completing the work. While this may be the correct measure of damages on a typical
construction contract involving a contractor hired by a real property owner to construct
improvements on real property, the contract here is not a typical construction contract.
Rather, the contract expressly provided that the property and improvements thereon
would be marketed for sale and "sold for profit." Thus, the parties clearly contemplated
lost profits as a measure of damages when they entered into the contract. (Civ. Code,
§ 3300 ["For the breach of an obligation arising from contract, the measure of damages,
except where otherwise expressly provided by this code, is the amount which will
compensate the party aggrieved for all the detriment proximately caused thereby, or
which, in the ordinary course of things, would be likely to result therefrom."].)
In a one paragraph argument, Plaintiffs point out that Stone declared the contract
" 'null and void' " in a 2002 letter. However, they provided no argument or analysis
explaining how this fact shows Stone lacked probable cause to file the cross-complaint
10 based on alleged breaches occurring before that date and underlying complaint filed in
2002. Accordingly, we deem the issue abandoned. (Landry v. Berryessa Union School
Dist. (1995) 39 Cal.App.4th 691, 699–700 (Landry).)
Finally, Plaintiffs set forth portions of Maraziti's declaration which were not
objected to below. They assert that these portions of the declaration, if believed,
demonstrated a probability they would prevail in their malicious prosecution claim. They
also argue that the trial court improperly sustained objections to other portions of the
declaration that would have demonstrated a probability they would prevail in their
malicious prosecution claim.
For purposes of analysis, we examined Maraziti's entire 23-page declaration to
determine whether it contained evidence showing Stone lacked probable cause to file his
cross-complaint, thus establishing a probability that Plaintiffs would prevail on the merits
of their malicious prosecution claim. The first five paragraphs of the declaration
established Maraziti's knowledge and authenticated certain documents. Maraziti next
stated that Stone prosecuted his cross-complaint based on fabricated documents, that the
summary adjudication motion was not decided on its merits, and then authenticated
numerous documents. The balance of the declaration stated that Stone prosecuted his
cross-complaint based on fabricated documents, that Stone knew the documents were
fabricated, that Stone exaggerated his claims and then dropped most of them at the last
moment, and that Stone failed to cooperate during discovery. Maraziti's supplemental
declaration provided foundation for some exhibits and again attested that Stone altered
numerous documents.
11 Maraziti's declarations do not contain evidence showing Stone lacked probable
cause to file and prosecute the underlying cross-complaint. As we discussed above, the
underlying trial court evaluated the documents that Stone allegedly falsified, but
nonetheless concluded that the fabricated documents did not impact the litigation. Based
on these findings, Stone's delay in providing any documents could not have affected the
litigation. While Plaintiffs suggest in their reply brief that the underlying trial court did
not have all of the fabricated documents and thus did not consider all of the evidence,
Plaintiffs failed to cite any particular document and explain how the document
established that Stone lacked probable cause to prosecute the underlying cross-complaint.
Finally, Plaintiffs contend that the trial court erroneously excluded some of the
documents they presented in opposition to the anti-SLAPP motion. Assuming, without
deciding, that the trial court erroneously excluded these documents, Plaintiffs again failed
to explain how these documents established that Stone lacked probable cause to prosecute
the cross-complaint. Plaintiffs argued some of the excluded documents reveal that Stone
"made a huge profit and suffered no loss." Accordingly, they conclude that Stone
maliciously sought over $3 million in damages. These documents were escrow closing
statements on two of the lots showing money due to Stone. However, as the trial court
impliedly noted in deciding the underlying action, evidence showing purported profits or
losses are meaningless without an accounting.
Plaintiffs failed to show a probability of prevailing on the lack of probable cause
element of their malicious prosecution claim. Accordingly, the trial court properly
granted the motion to strike.
12 C. Denial of Plaintiffs' Request for a Continuance and for Discovery
The filing of an anti-SLAPP motion automatically stays "[a]ll discovery
proceedings." (§ 425.16, subd. (g).) To justify lifting the discovery stay, the plaintiff
must demonstrate that the proposed discovery is both necessary in the context of the
issues raised by the anti-SLAPP motion and must explain what facts the plaintiff expects
to uncover. (1-800 Contacts, Inc. v. Steinberg (2003) 107 Cal.App.4th 568, 593.) The
decision whether to lift the discovery stay is within the trial court's discretion. (Tutor-
Saliba Corp. v. Herrera (2006) 136 Cal.App.4th 604, 617.)
Here, Plaintiffs requested that the trial court continue the hearing on the anti-
SLAPP motion to allow them to conduct discovery on whether Stone's counsel (1) did a
forensic analysis of Sub-Rider A or other allegedly fabricated documents, and
(2) objectively analyzed Stone's damage claims, including any expert analysis. Plaintiffs
sought to depose Stone, any experts, Stone's attorneys, and the person most
knowledgeable regarding the authenticity of documents and damages. The trial court
denied the request, ruling that the information Plaintiffs sought was covered by the
attorney-client privilege and the attorney work product doctrine.
Plaintiffs assert the trial court abused its discretion when it denied their request to
conduct limited discovery because Stone waived the "work product privilege" when his
attorneys asserted that they reviewed documents relating to the dispute, gave their
impressions, and expressed their belief that probable cause existed for the cross-claims.
We reject their assertion.
13 As the party opposing the attorney-client privilege, Plaintiffs had the burden of
establishing that the privilege did not apply, that an exception existed, or that there was
an express or implied waiver. (Evid. Code, §§ 912, 917, subd. (a); Titmas v. Superior
Court (2001) 87 Cal.App.4th 738, 745.) Plaintiffs, however, cited no authority and
provided no analysis to support their assertion that Stone waived either the attorney-client
privilege or the protection afforded by the attorney work product doctrine. Plaintiffs
similarly cited no authority and provided no analysis to support their implied assertion
that the trial court erred when it concluded that discovery would be futile because the
information they sought was covered by the attorney-client privilege or the attorney work
product doctrine. Plaintiffs also failed to show how Stone or Stone's attorneys disclosed
a significant part of work product so as to waive the protection afforded by the attorney
work product doctrine. (OXY Resources California LLC v. Superior Court (2004) 115
Cal.App.4th 874, 891.) Accordingly, we deem these issues abandoned. (Landry, supra,
39 Cal.App.4th at pp. 699–700.) In any event, we reviewed the declarations filed by
Stone's attorneys in opposition to the anti-SLAPP motion and conclude that the
declarations set forth nonprotected information based on the personal knowledge of the
declarants and do not disclose any confidential communications with Stone.
Plaintiffs also assert that some of the discovery they sought was not subject to the
attorney-client privilege or attorney work product doctrine. However, they failed to
detail how additional discovery on the matters raised in their discovery request was
necessary in the context of the issues raised in the anti-SLAPP motion. (The Garment
Workers Center v. Superior Court (2004) 117 Cal.App.4th 1156, 1162.) In their ex parte
14 application for discovery, Plaintiffs strenuously argued that Stone's exaggerated damage
claims and falsified documents showed a lack of probable cause to prosecute the
underlying cross-complaint. As the underlying trial court noted in its statement of
decision, both parties "engaged in considerable discovery in preparation for trial" and
presented a "staggering" amount of documentation. After reviewing all the evidence, the
underlying trial court concluded that the fabricated documents did not impact the
litigation, Stone believed the validity of his claims, and Stone's failure to provide a
qualified accounting doomed his claims. Plaintiffs have not detailed what nonprivileged
information they hoped to uncover and it appears no amount of discovery could
undermine this strong evidence of probable cause.
On this record, Plaintiffs have not shown that the trial court abused its discretion
in denying their discovery request. Having failed to make their case for discovery,
Plaintiffs necessarily failed to show good cause for a continuance.
DISPOSITION
The order is affirmed. Respondent is entitled to his costs on appeal.
MCINTYRE, Acting P. J.
WE CONCUR:
O'ROURKE, J.
IRION, J.