Xcentric Ventures v. Lisa Borodkin

• Court: Court of Appeals for the Ninth Circuit
• Decided: June 15, 2015
• Docket: 13-15544
• Status: Unpublished

Opinion

FILED NOT FOR PUBLICATION JUN 15 2015

MOLLY C. DWYER, CLERK UNITED STATES COURT OF APPEALS U.S. COURT OF APPEALS

FOR THE NINTH CIRCUIT

XCENTRIC VENTURES, LLC, an No. 13-15544 Arizona limited liability company, D.C. No. 2:11-cv-01426-GMS Plaintiff - Appellant,

v. MEMORANDUM*

LISA J. BORODKIN,

Defendant - Appellee.

XCENTRIC VENTURES, LLC, an No. 13-16271 Arizona limited liability company, D.C. No. 2:11-cv-01426-GMS Plaintiff - Appellant,

v.

LISA J. BORODKIN; et al.,

Defendants - Appellees.

Appeal from the United States District Court for the District of Arizona G. Murray Snow, District Judge, Presiding

* This disposition is not appropriate for publication and is not precedent except as provided by 9th Cir. R. 36-3. Argued and Submitted June 10, 2015 San Francisco, California

Before: SILVERMAN, GOULD, and HURWITZ, Circuit Judges.

Xcentric Ventures appeals the district court’s grant of summary judgment

and judgment on the pleadings in favor of defendants Mobrez and Llaneras and

Rule 12(b)(6) dismissal of defendant Borodkin in Xcentric’s malicious prosecution

action. We have jurisdiction pursuant to 28 U.S.C. § 1291 and review de novo.

We agree with the district court that Xcentric cannot prove an element of its

malicious prosecution claims, that the underlying claims were brought or continued

without factual or legal probable cause. We also deny Borodkin’s motion for

sanctions.

Xcentric claims that the underlying claims lacked factual probable cause

because defendants Mobrez and Llaneras lied about phone conversations to support

their underlying extortion claim. Factual probable cause is lacking if the litigant

“relies upon facts which he has no reasonable cause to believe to be true.”

Sangster v. Paetkau, 80 Cal. Rptr. 2d 66, 74 (Ct. App. 1998). However, summary

judgment is proper if any undisputed facts, other than the fabricated evidence,

provide probable cause for the claim. Roberts v. McAfee, Inc., 660 F.3d 1156,

1165 (9th Cir. 2011); Sangster, 80 Cal. Rptr. 2d at 75-77. The underlying

2 complaint, first amended complaint, and summary judgment orders establish that

all of the underlying claims in this case were supported by other undisputed written

statements. Therefore, any dispute about whether Mobrez and Llaneras lied about

the phone conversations did not negate probable cause. See Roberts, 660 F.3d at

1165; Sangster, 80 Cal. Rptr. 2d at 75-77.

For the same reason, Xcentric cannot state a plausible claim that Borodkin

continued the lawsuit without factual probable cause after learning that her clients

had lied about the phone calls. The district court properly took judicial notice of

the underlying court documents. Sprewell v. Golden State Warriors, 266 F.3d 979,

990 (9th Cir.), amended by 275 F.3d 1187 (9th Cir. 2001). Those documents

establish that Borodkin relied on written statements, not her clients’ original

statements about the phone calls, when she continued to pursue the claims in

California.

Legal probable cause exists if “any reasonable attorney would have thought

the claim tenable” on the facts known to him. Jarrow Formulas, Inc., v.

LaMarche, 74 P.3d 737, 742 (Cal. 2003). Legal probable cause exists even if the

claims are “extremely unlikely” to win. Id. The standard is an objective question

of law to be decided by the court. Sangster, 80 Cal. Rptr. 2d at 75. We agree with

3 the district court that the claims asserted by Mobrez, Llaneras, and Borodkin in

California were tenable based on the facts alleged in the underlying lawsuit.

The underlying attempted racketeering extortion claim alleged that Xcentric

attempted to extort money by encouraging third parties to post negative reviews,

manipulating the posts to highlight negative reviews and to further highlight the

negative reviews if the businesses posted rebuttals, and then charging high fees to

“turn the negative into a positive.” The claim was tenable because a district court

had previously held that similar allegations stated an extortion claim against

Xcentric. Hy Cite Corp. v badbusinessbureau.com, L.L.C., 418 F. Supp. 2d 1142,

1149-50 (D. Ariz. 2005) (holding that allegations that Xcentric created and

solicited false, defamatory complaints against businesses and then charged $50,000

and monthly fee of $1,500 to remove or stop posting the complaints stated an

extortion claim); Sheldon Appel Co. v. Albert & Oliker, 765 P.2d 498, 511-12 (Cal.

1989) (a claim is tenable if “at least one prior California decision” with “somewhat

comparable” facts suggests available relief).

Nor were the racketeering or unfair competition claims untenable because

the business run by Mobrez and Llaneras, Asia Economic Institute, lacked revenue.

Mobrez and Llaneras sufficiently alleged and proved the requisite injury to

business and property and economic loss, including that they paid an expert to

4 mitigate the damaging posts and lost specific business opportunities and contracts

because of the negative posts. Diaz v. Gates, 420 F.3d 897, 900 (9th Cir. 2005) (en

banc) (per curiam) (holding that injury to a business or property interest includes

harm that “amount[s] to intentional interference with contract and interference with

prospective business relations”); Kwikset Corp. v. Superior Ct., 246 P.3d 877, 884

(Cal. 2011) (requiring some sort of lost money or property to establish actual

economic loss for unfair competition claims).

Xcentric alleged and argued that the remaining claims lacked legal probable

cause because it was immune for third party posts pursuant to the Communications

Decency Act. The fraud and unfair business practices claims alleged that Xcentric

manipulated and added content to the posts; misrepresented its website as neutral,

even though it manipulated the postings to favor its program members; and made

other misrepresentations about the nature of its website. The claim was tenable

because the Communications Decency Act does not immunize Xcentric for the

content it creates and posts. Fair Housing Council v. Roommates.Com, LLC, 521

F.3d 1157, 1163 (9th Cir. 2008) (en banc). Moreover, at the time of the underlying

case, at least one district court in California had indicated in dicta that the

Communications Decency Act does not immunize misrepresentations made by a

publisher about its publishing conduct. Levitt v. Yelp! Inc., Nos. 10-1321 & 10-

5 2351, 2011 WL 5079526, at *9 (N.D. Cal. Oct. 26, 2011) (dicta), aff’d on other

grounds, 765 F.3d 1123 (9th Cir. 2014).

The remaining derivative claims asserted against Xcentric were tenable

because Xcentric was a necessary party if the plaintiffs could obtain an order for

the third parties to remove the defamatory posts. Blockowicz v. Williams, 675 F.

Supp. 2d 912, 915-16 (N.D. Ill. 2009) (refusing to order Xcentric to remove

defamatory postings, even though the plaintiffs had obtained injunctive relief,

because Xcentric was not a party to the lawsuit).

Finally, the district court did not abuse its discretion when it denied

Xcentric’s requests to extend the case management order deadline and to file a

second amended complaint.

AFFIRMED.