Filed 8/12/15 Morris v. Smith CA5

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 

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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIFTH APPELLATE DISTRICT

JOHN D. MORRIS, et al.,

Plaintiffs and Appellants,

v.

STEVEN A. SMITH,

Defendant and Respondent.

F068758

(Super. Ct. No. 684623)

OPINION

APPEAL from a judgment of the Superior Court of Stanislaus County. 

William A. Mayhew, Judge.

Ellis Law Group, Mark E. Ellis, Theresa M. LaVoie, and William A. Lapcevic for 

Plaintiffs and Appellants.

Goodman & Associates, Karen M. Goodman, Summer D. Haro and Virginia Cale 

for Defendant and Respondent.

-ooOooJohn D. Morris (John) and Thomas C. Morris (Thomas) (collectively the brothers) 

filed a malicious prosecution action against respondent Steven A. Smith, individually and 

doing business as Law Office of Steven A. Smith (Smith). The brothers’ sister, Mary 

Kay Herger (Mary Kay), was also named as a defendant in the action, with four causes of 
2.

action alleged against her, including malicious prosecution. The trial court granted 

Smith’s special motion to dismiss the malicious prosecution claim alleged against him 

under the anti-SLAPP (strategic lawsuit against public participation) statute (Code Civ. 

Proc. § 425.16)1 based on the brothers’ inability to show a probability of prevailing on 

the issue of probable cause. 

On appeal, the brothers contend the trial court erred in granting the motion 

because they established a probability of prevailing on all elements of the malicious 

prosecution claim. We affirm the order on the basis that the voluntary dismissal of the 

brothers from the underlying action was not a favorable termination within the meaning 

of the malicious prosecution law, as Smith’s undisputed evidence shows the dismissal 

was based solely on financial considerations, and does not reflect the merits of the 

underlying action. Contrary to the brothers’ assertion, they adduced no evidence from 

which a jury reasonably could find favorable termination. Given our decision, we are not 

required to address the probable cause and malice elements of the malicious prosecution 

action.2

FACTUAL AND PROCEDURAL BACKGROUND

This case arises out of a family dispute following the September 30, 2008 death of 

Charles A. Morris, Jr. (Charles) between Charles’ wife, Kathleen Morris (Kay) (who was 

76 years old when Charles died), their daughter Mary Kay, and their two sons, Thomas 

and John. 

 

1 Undesignated statutory references are to the Code of Civil Procedure. 

2 After briefing was completed in this case, the brothers filed a motion for the 

production of additional documentary evidence on appeal, in which they asked us to 

augment the record on appeal with additional evidence pursuant to section 909 and 

California Rules of Court, Rule 8.252(c). The brothers argue the evidence is relevant to 

the element of malice and to correct alleged misrepresentations Smith made in his 

supplemental declaration relating to malice. We deferred ruling on the motion, which we 

now deny since the documents are irrelevant as we do not address the malice element. 
3.

In 1996, attorney Richard Calone (Calone), a partner in the Calone Law Group 

LLP, prepared certain estate planning documents for Charles and Kay. These documents 

included: (1) the Kay Morris Family Insurance Trust (Insurance Trust), which was to be 

funded for Kay’s benefit by the proceeds of a life insurance policy at Charles’ death; and 

(2) the Charles A. Morris, Jr. and Kathleen Morris Family Trust (Morris Trust), which 

was set up to receive proceeds, profits, rents, and royalties from a limited partnership 

held by the Morris Trust that held title to approximately 400 acres of land. 

In 2005, Calone prepared the Morris Family Contract, which divided all of the real 

property in the limited partnership between the brothers and Mary Kay in the following 

approximate amounts: 160 acres to Thomas, 120 acres to John, and 140 acres, plus a 3.5 

acre parcel on which Charles and Kay’s residence was located, to Mary Kay. The 

property was to be distributed upon the deaths of both Charles and Kay, unless Kay made 

an election, on Charles’ death, to immediately distribute the estate property and proceeds. 

In 2006, Calone prepared the Morris Family Settlement Agreement (Settlement), 

which modified Charles and Kay’s estate plan. The settlement arose out of a dispute 

concerning Mary Kay’s indebtedness to various persons and entities in connection with 

the construction of her home, including an encumbrance on the 3.5 acre parcel; as of 

October 2006, the construction project had not been completed. The family agreed the 

limited partnership would sell 70 acres designated as Mary Kay’s inheritance to satisfy 

the outstanding indebtedness, Mary Kay would be allowed to complete the home 

construction project, and the interests of the other family members would not be used for 

the construction without the parties’ written consent. 

On Charles’ death in 2008, the Insurance Trust was funded with $225,000, the 

proceeds of the life insurance policy. Thomas was the trustee; John would become the 

trustee if Thomas was unable to perform, and Mary Kay would become the trustee should 

John be unable to perform. Pursuant to the Insurance Trust’s terms, the trustee could 
4.

invade the principal only to pay expenses related to Kay’s health, welfare, education and 

maintenance. 

After Charles’ death, Kay disclaimed her interest in the partnership real property 

and asked that it be distributed pursuant to the Morris Family Contract. In the spring of 

2009, it was discovered that the 3.5 acre parcel, which had been placed in Charles’ name 

as his separate property prior to his death so he could refinance the parcel to raise money 

for Mary Kay’s home construction project, had not been transferred back to the trust, 

making Kay the legal vested owner. In order to vest the parcel inside the trust at Charles’ 

death nunc pro tunc, which would allow Kay to avoid the costs and tax burden of probate 

and place the parcel in Mary Kay’s name faster, a Heggstad petition needed to be filed to 

obtain a court order declaring the parcel an asset of the trust.3 

In June 2009, Mary Kay and Kay contacted Smith about preparing a Heggstad

petition; Smith told them he charged a flat fee of $1,500 to prepare such a petition. 

Ultimately, Calone prepared the petition, as well as the other documents to effect the 

disclaimer, including Kay’s agreement to withdraw from the limited partnership, an 

assignment of partnership assets and life estate to Kay as the withdrawing partner, an 

agreement regarding the allocation and distribution of assets held in the Morris Trust, and 

an agreement dissolving the limited partnership. Calone also prepared an 

“Indemnification and Hold Harmless Agreement” (the Indemnity Agreement), which was 

entered into effective July 22, 2009 between Mary Kay, as the indemnitor, and Kay, the 

brothers and the limited partnership, as the indemnitees. The Indemnity Agreement 

provided that refinancing of the 3.5 acre parcel was contingent on, among other things, 

Mary Kay bearing the expenses incurred in bringing the Heggstad petition. 

 

3 A Heggstad petition is a petition to retitle assets into the trust; it is based on the 

authority of Estate of Heggstad (1993) 16 Cal.App.4th 943.
5.

On August 31, 2009, Calone billed Kay $17,780.59 for his legal services; as of 

April 2010, Calone claimed he was owed approximately $23,000 for his services. A 

dispute arose over the payment of Calone’s fees, including the reasonableness of the fees, 

whether they included work unrelated to the Heggstad petition, and who would pay them. 

According to Thomas, Mary Kay and Kay demanded he pay Calone’s fees out of the 

principal of the Insurance Trust, but he refused to do so based on the Indemnity 

Agreement, which required Mary Kay to pay the fees, and his opinion that such a 

distribution would not be for Kay’s health, welfare, education or support. In November 

2009, Calone advised Thomas that he had the authority to grant Kay’s request to 

distribute the balance of the Insurance Trust to her, but if he decided not to do so, he 

could resign as trustee. In December 2009, Thomas resigned as trustee, thereby making 

John the trustee. 

In February 2010, the brothers, through their attorney Leslie Kalim McHugh 

(McHugh), advised Mary Kay that they had received notice of a claim from Calone 

related to his unpaid invoices totaling $31,337.23 as defined in the Indemnity Agreement, 

which, as indemnitor, she was required to defend. By December 2010, Calone still had 

not been paid. 

Ultimately, Mary Kay retained Smith to represent her in a potential case against 

her brothers and Calone, while Kay retained attorney David M. Zeff (Zeff) to represent 

her in the same potential action. Since Kay’s and Mary Kay’s claims involved the same 

transactions and parties, it was agreed, in the interest of judicial economy, to plead their 

claims together in a single complaint. 

In January 2011, Zeff and Smith filed an initial complaint on behalf of their 

respective clients, with Kay and Mary Kay as the named plaintiffs, and the brothers and 

Calone as the named defendants. A first amended complaint was filed on February 24, 

2011, to which Calone demurred. In July 2011, Mary Kay and Kay filed a second 

amended complaint (SAC), which became the operative complaint in the underlying 
6.

action. Mary Kay alleged two causes of action against the brothers in the SAC: (1) 

breach of fiduciary duty – constructive fraud; and (2) rescission – mutual mistake.4

Specifically, the SAC alleged that Calone failed to provide any conflict of interest 

disclosure or obtain a waiver of any conflict of interest when he prepared the disclaimer 

and indemnity documents; Calone presented the documents to Kay and Mary Kay for 

signature without explaining their meaning, content, or impact, or that he had a conflict 

of interest; Calone billed Kay and Mary Kay an “unconscionable sum” over $22,000 for 

the Heggstad petition, where the normal and customary rate for such services would fall 

in the range of $1,500 to $2,000; when Kay asked for the money to pay the bill from the 

Insurance Trust, she was told Mary Kay was responsible for the bill pursuant to the 

Indemnity Agreement; Calone pressured Kay for payment despite her having protested 

the amounts billed; and when Kay did not pay, Calone demanded payment from John, as 

trustee of the Insurance Trust, advising him the payment could be recouped from Mary 

Kay pursuant to the Indemnity Agreement. 

Mary Kay alleged her brothers breached the fiduciary duties they owed her as 

partners in the family partnership when they (1) failed to tell her that by executing the 

Indemnity Agreement, she would be held responsible for all the legal fees and costs 

Calone charged for the Heggstad petition, (2) failed to disclose Calone’s conflicts of 

interest in jointly representing Kay, Mary Kay and the brothers in preparing the 

disclaimer and indemnity documents, and (3) assured Mary Kay that the documents 

protected her and Kay’s interests, did not advance the brothers’ interests at Mary Kay’s 

expense, and would not work to Mary Kay’s detriment.5 Kay and Mary Kay sought to 

 

4 Kay joined in Mary Kay’s claims against the brothers. Kay and Mary Kay also 

alleged legal malpractice and breach of fiduciary duty causes of action against Calone. 

Kay alleged causes of action against Calone and the brothers for fraud, deceit, and 

fiduciary elder abuse, and a cause of action for breach of contract against Thomas.

5 Kay separately alleged the brothers breached the fiduciary duties they owed her 

by: (1) failing to advise her that the disclaimer and indemnity documents would harm her 
7.

recover economic and noneconomic damages for the brothers’ breaches, including 

physical, mental, emotional distress, stress, sleep deprivation and anxiety, in a sum to be 

ascertained, but which was certain to exceed $500,000, as well as punitive damages. 

The rescission claim alleged that the transactions by which Kay transferred 

ownership interests to the brothers and by which Mary Kay executed a document 

purporting to require her to indemnify the brothers, resulted from “mutual mistakes of 

both fact and law” by the parties, which were grounds for rescission of all transactions 

and “placement of the parties back to the status quo ante.” Kay and Mary Kay also 

sought to remove John as trustee of the Insurance Trust, and to name Mary Kay as trustee 

in his place. 

On November 10, 2011, Calone filed an answer to the SAC and cross-complaint 

against Kay and Mary Kay seeking $37,836.22 for his fees, plus prejudgment interest. 

The parties engaged in written discovery, and Mary Kay and Kay were both deposed in 

April 2012. In February 2012, John resigned as trustee of the Insurance Trust. 

After Kay’s and Mary Kay’s depositions, they reached a settlement with Calone, 

in which Calone agreed to dismiss his cross-complaint in exchange for a general release 

and dismissal of all causes of action against him. Pursuant to the settlement agreement, 

separate dismissals – one by Smith on Mary Kay’s behalf and the other by Zeff on Kay’s 

behalf – were entered on May 21, 2012. All claims in the SAC against Calone and the 

cross-complaint were dismissed with prejudice. 

 

legal and financial interests, advance their interests at Kay’s expense, and place her living 

situation and financial abilities in their hands and out of her control; (2) failing to advise 

her that by executing the Indemnity Agreement, Mary Kay would be held responsible for 

all legal fees and costs Calone charged for the Heggstad petition; and (3) failing to 

disclose Calone’s conflicts of interest and assuring Kay that the disclaimer and indemnity 

documents protected her and Mary Kay’s interests and did not advance the brothers’ 

interests at Mary Kay’s expense. 
8.

On May 30, 2012, the brothers’ attorney who represented them in the underlying 

action, William A. Lapcevic (Lapcevic), asked Smith and Zeff to stipulate to the filing of 

a cross-complaint by the brothers against Mary Kay. Smith and Zeff declined. On 

June 4, 2012, a case management conference was held for preferential trial setting, with 

Zeff, Smith and Lapcevic all present. The trial court set the matter for trial on September 

11, 2012, after considering the attorneys’ calendars. Lapcevic told Smith he intended to 

move ex parte for leave to amend and file a cross-complaint, and again asked for a 

stipulation. Smith refused and told Lapcevic he would vehemently oppose any such 

motion. 

On June 5, 2012, Mary Kay dismissed the remainder of the SAC, including her 

claims against her brothers, with prejudice. Kay, however, continued to pursue her 

claims against the brothers. That same day, the brothers filed a motion for leave to file a 

cross-complaint against Mary Kay for breach of contract, fraud and deceit, and breach of 

fiduciary duty. The brothers, who had filed answers to the SAC in August 2011, asserted 

they obtained newly discovered information during Kay’s and Mary Kay’s depositions 

that justified filing a cross-complaint against Mary Kay. 

In the proposed cross-complaint, the brothers alleged that, based on the fact it was 

Mary Kay’s actions that caused the 3.5 acre parcel to be outside the trust, “the parties 

agreed” she “must sign” an agreement to indemnify and hold harmless Kay and the 

brothers for any expenses which arose out of the Heggstad petition, drafting the 

Indemnity Agreement, and financing the 3.5 acre parcel. The proposed cross-complaint 

further alleged that based on Mary Kay’s “scofflaw-like history as well as her fraudulent 

acts toward her own father,” the brothers would move forward with the dissolution of the 

partnership only if Mary Kay would agree to pay for all attorney fees associated with the 

petition, Indemnity Agreement and financing. The proposed cross-complaint alleged 

Mary Kay and the brothers were partners who owed each other fiduciary duties, including 

the duty to disclose facts relevant to the transaction and to avoid self-dealing and 
9.

conflicts of interest, which duties Mary Kay breached by falsely promising to indemnify 

the brothers for attorney fees related to drafting the petition and Indemnity Agreement, 

and executing the agreement without any intention of paying those fees. 

Smith filed written opposition to the motion on Mary Kay’s behalf. Smith argued 

the brothers did not act in good faith in bringing the motion. In his accompanying 

declaration, Smith stated that based upon the dismissal of the claims involving Calone, 

Mary Kay was no longer entitled to the relief she pled in the SAC, as she only sought to 

void the indemnity agreement and Calone was no longer seeking his fees, and while 

Calone’s attorneys knew this and offered to include a dismissal of the entire action for 

Mary Kay with respect to all defendants, that offer was withdrawn. Smith asserted that 

allowing the cross-complaint to be filed would be extremely prejudicial to Mary Kay, 

since she dismissed Calone due to the fact there were no other causes of action pending 

against her and she would be denied a claim against the one party who could have 

indemnified her against an award of damages to the brothers. 

The trial court denied the brothers’ motion on June 19, 2012 on the following 

grounds: (1) the alleged information upon which the cross-complaint was based had been 

available for some time and the delayed discovery was due to the brothers’ failure to 

undertake their own written discovery; (2) the deposition excerpts upon which the 

brothers based their claims did not provide a sufficient basis for those claims; and 

(3) allowing the cross-complaint would not serve the interests of justice, but rather would 

prejudice Mary Kay in view of the recent dismissal of her claims against other defendants 

who may have been the only parties to provide her indemnity under the subject 

agreement. 

On June 3, 2013, the brothers filed the present action against Smith and Mary Kay. 

As pertinent here, in the first amended complaint, filed September 9, 2013, the brothers 

alleged that Smith subjected them to malicious prosecution by instituting and maintaining 

the underlying action against them. 
10.

Smith filed a special motion to strike under the anti-SLAPP law, section 425.16, 

arguing that the brothers had no probability of success on their malicious prosecution 

claim as there had not been a favorable termination on the merits, Smith had probable 

cause to prosecute the underlying case, and Smith lacked malice in prosecuting the case. 

Smith explained in his declaration in support of the motion that before filing the 

complaint in the underlying action, he evaluated Mary Kay’s potential claims based on 

facts Mary Kay and Kay communicated to him, his review of the documents Mary Kay 

provided, and his own legal knowledge and experience regarding fiduciary relationships 

and duties, and formed the opinion that the brothers had breached their fiduciary duties to 

Mary Kay. Smith believed the brothers had colluded with Calone to prepare and execute 

the disclaimer and indemnity documents so they would be excused from paying Calone’s 

exorbitant fees, which Mary Kay was forced to bear, and knowingly misled Mary Kay 

and Kay as to the legal effect of those documents. Smith declared he reasonably believed 

there was probable cause for the causes of action alleged in the original complaint. Smith 

further declared that the discovery produced in the case, including documents, responses 

to written discovery, and deposition testimony, did not diminish his opinion about the 

validity of Mary Kay’s claims against Calone and the brothers, and the allegations in the 

proposed cross-complaint further confirmed his belief the brothers breached their 

fiduciary duties to Mary Kay. 

Smith stated he never harbored any ill will towards the brothers; he did not know 

either of them personally and had never heard their names before Mary Kay contacted 

him. He filed the complaint against them based solely on the facts and evidence Mary 

Kay provided him, which supported the causes of action against them, and he intended 

only to seek relief for Mary Kay which would make her whole in light of the actions 

Calone and her brothers had taken against her, and not for any improper purpose. 

Smith also explained why he dismissed Mary Kay’s claims against her brothers. 

After Calone was dismissed, Smith researched and evaluated the costs, effects and 
11.

potential benefits of continuing the litigation against the brothers, including whether it 

made economic sense for Mary Kay to continue with the claims against them. Smith 

concluded it did not because: (1) Mary Kay had already been made whole through 

Calone’s waiver of his fees; (2) since Mary Kay’s claims against her brothers arose out of 

her potential liability under the Indemnity Agreement, Calone’s waiver of his fees 

negated her need to rescind the Indemnity Agreement to avoid those fees; and (3) Mary 

Kay sought to limit the continued cost of litigation. After evaluating these 

considerations, Smith believed that continuing the litigation was not economically 

feasible, and while Mary Kay incurred attorney fees and costs in the underlying action, it 

was not beneficial for her to incur additional litigation costs merely to recover them. It 

was in consideration of these financial interests that Mary Kay dismissed the remainder 

of her complaint 15 days after she dismissed the claims against Calone. Smith further 

explained that while the parties exchanged settlement communications both before and 

after the settlement with Calone, those communications were made in a good faith effort 

to reach an economical resolution of the parties’ claims and were not made because Mary 

Kay’s claims lacked merit. 

Smith also explained why he would not stipulate to the filing of the brothers’ 

cross-complaint: (1) he did not think there was any merit to the potential claims against 

Mary Kay; (2) it was a compulsory cross-complaint that should have been filed when the 

brothers first appeared in the case; and (3) it was not in Mary Kay’s best interest to 

stipulate to a late, frivolous, cross-complaint that would increase her litigation costs. 

In their opposition to the motion, the brothers submitted declarations from 

themselves; attorney McHugh; Charles and Kay’s accountant Michael Schmidt; Raina M. 

Rochert, an associate with Calone’s firm; attorney Lapcevic; Theresa M. LaVoie, a 

partner with the Ellis Law Group, who represented Calone in the underlying litigation 

and, together with Lapcevic (who is now an associate with the Ellis Law Group) 

represents the brothers in the present action; and Calone. The brothers also submitted 
12.

numerous documents from the underlying litigation, including settlement offers and 

demands, discovery responses, and excerpts from the depositions of Mary Kay and Kay. 

The brothers argued their evidence showed Smith lacked probable cause to bring the 

underlying action, Smith initiated and continued prosecuting the underlying action with 

malice, and the underlying action terminated in favor of the brothers on the merits. 

The trial court granted the motion. The trial court first ruled on the parties’ 

evidentiary objections, sustaining one of the brothers’ objections to Smith’s evidence, 

and 11 of Smith’s objections to the brothers’ evidence, and overruling the others.6 The 

trial court noted the parties agreed that Smith’s representation of Mary Kay in the 

underlying action constituted protected activity such that the brothers must plead a prima 

facie case for malicious prosecution and produce admissible evidence showing a 

reasonable probability of success on the merits. The trial court found that the brothers 

did not show a probability of succeeding on the issue of whether Smith lacked probable 

cause to bring the two causes of action Mary Kay asserted against the brothers below, as 

neither party argued or introduced evidence concerning the objective tenability of the 

rescission cause of action based on mistake, and the brothers’ proposed cross-complaint 

in the underlying action established the objective tenability of Mary Kay’s breach of 

fiduciary duty claim. 

DISCUSSION

Resolving the merits of a special motion to strike requires “a two-part analysis, 

concentrating initially on whether the challenged cause of action arises from protected 

activity within the meaning of the statute and, if it does, proceeding secondly to whether 

the plaintiff can establish a probability of prevailing on the merits.” (Overstock.com, 

Inc. v. Gradient Analytics, Inc. (2007) 151 Cal.App.4th 688, 699 (Overstock).) The 

 

6 The trial court ruled that declarations that a party made settlement demands on a 

given date were admissible to prove an action was still being prosecuted on that date, but 

the terms of the demands, as well as the written demands themselves, were inadmissible. 
13.

brothers do not contend that Smith did not make the threshold showing that the malicious 

prosecution action arose from protected activity.7 As a result, we consider only whether 

the brothers met their burden of demonstrating a probability of prevailing on their 

malicious prosecution claim against Smith. (Id. at p. 699.)

“To establish a probability of prevailing, 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.’” (Soukup v. Law Offices of Herbert Hafif (2006) 39 Cal.4th 260, 291 

(Soukup).) To satisfy the plaintiff’s burden, the plaintiff must “‘state[] and substantiate [] 

a legally sufficient claim.’” (Jarrow Formulas, Inc. v. LaMarche (2003) 31 Cal.4th 728, 

738.) The plaintiff must make a prima facie showing of facts that would, if proven, 

support a judgment in his or her favor. (Wilson v. Parker, Covert & Chidester (2002) 

28 Cal.4th 811, 821 (Wilson).) For purposes of this inquiry, “the trial court considers the 

pleadings and evidentiary submissions of both the plaintiff and the defendant.” (Ibid.) 

But “‘the court does not weigh the evidence or make credibility determinations.’” (Ross, 

supra, 145 Cal.App.4th at p. 197.) The court must assume the truth of the evidence 

favorable to the plaintiff and consider the defendant’s opposing evidence only to 

determine if it defeats the plaintiff’s showing as a matter of law. (Flatley v. Mauro

(2006) 39 Cal.4th 299, 326; Soukup, supra, 39 Cal.4th at p. 291.) Although the court 

does not weigh the evidence, “it should grant the motion if, as a matter of law, the 

defendant’s evidence supporting the motion defeats the plaintiff’s attempt to establish 

evidentiary support for the claim.” (Wilson, supra, at p. 821.)

We review the trial court’s decision de novo, engaging in the same process as the 

trial court to determine whether, as a matter of law, plaintiff established a probability of 

prevailing. (Marijanovic v. Gray, York & Duffy (2006) 137 Cal.App.4th 1262, 1270.) 

 

7 “It is settled that a claim for malicious prosecution is subject to a special motion 

to strike under section 425.16.” (Ross v. Kish (2006) 145 Cal.App.4th 188, 197 (Ross).)
14.

We review the trial court’s ruling and not its rationale. (City of Santa Monica v. Stewart

(2005) 126 Cal.App.4th 43, 80 (Santa Monica).)

The tort of malicious prosecution of a civil action has four elements: (1) the 

initiation of a prior civil proceeding; (2) a termination of that proceeding favorable to the 

party now bringing the malicious prosecution action; (3) a lack of probable cause in 

bringing the prior proceeding; and (4) malice. (Slaney v. Ranger Ins. Co. (2004) 

115 Cal.App.4th 306, 318; 5 Witkin, Summary of Cal. Law (10th ed. 2005) Torts, § 486, 

p. 712.) If any of these elements is missing, a malicious prosecution action fails as a 

matter of law. (Pender v. Radin (1994) 23 Cal.App.4th 1807, 1813-1814.) The record 

shows the brothers could not show a probability of success because they are unable to 

establish that they obtained a favorable termination on the merits of the underlying 

action.

“In order for a termination of a lawsuit to be considered favorable with regard to a 

malicious prosecution claim, the termination must reflect on the merits of the action and 

the plaintiff’s innocence of the misconduct alleged in the lawsuit.” (Contemporary 

Services Corp. v. Staff Pro, Inc. (2007) 152 Cal.App.4th 1043, 1056 (Contemporary 

Services).) “The theory underlying the requirement of favorable termination is that it 

tends to indicate the innocence of the accused, and coupled with the other elements of 

lack of probable cause and malice, establishes the tort . . . [of malicious prosecution].” 

(Jaffe v. Stone (1941) 18 Cal.2d 146, 150.) If the resolution of the underlying litigation 

“‘“leaves some doubt as to the defendant’s innocence or liability[, it] is not a favorable 

termination, and bars that party from bringing a malicious prosecution action against the 

underlying plaintiff.”’” (StaffPro, Inc. v. Elite Show Services, Inc. (2006) 

136 Cal.App.4th 1392, 1400.) While it is not essential that the prior proceeding was 

favorably terminated following trial on the merits in order to maintain a malicious 

prosecution action, termination must reflect on the merits of the underlying action. 

(Lackner v. LaCroix (1979) 25 Cal.3d 747, 750.) 
15.

A favorable termination does not occur simply because a party has prevailed in an 

underlying action. (Contemporary Services, supra, 152 Cal.App.4th at p. 1056.) “‘While 

the fact he has prevailed is an ingredient of a favorable termination, such termination 

must further reflect on his innocence of the alleged wrongful conduct. If the termination 

does not relate to the merits – reflecting on neither innocence of nor responsibility for the 

alleged misconduct – the termination is not favorable in the sense that it would support a 

subsequent action for malicious prosecution.’” (Ibid.) 

The voluntary dismissal of an action is commonly, but not always, a favorable 

termination for purposes of malicious prosecution law. (Villa v. Cole (1992) 

4 Cal.App.4th 1327, 1335.) “‘“A termination [by dismissal] is favorable when it reflects 

‘the opinion of someone, either the trial court or the prosecuting party, that the action 

lacked merit or if pursued would result in a decision in favor of the defendant.”’

[Citation.] . . . [¶] . . . The focus is not on the malicious prosecution plaintiff’s opinion of 

his innocence, but on the opinion of the dismissing party.’ [Citation.] ‘The test is 

whether or not the termination tends to indicate the innocence of the defendant or simply 

involves technical, procedural or other reasons that are not inconsistent with the 

defendant’s guilt.”’” (Contemporary Services, supra, 152 Cal.App.4th at pp. 1056-1057, 

some italics added; Robbins v. Blecher (1997) 52 Cal.App.4th 886, 893.)

When the underlying action is voluntarily dismissed, “‘“the court examines the 

record ‘to see if the disposition reflects the opinion of the court or the prosecuting party 

that the action would not succeed.’” [Citations.]’ [Citation.] ‘Should a conflict arise as 

to the circumstances of the termination, the determination of the reasons underlying the 

dismissal is a question of fact.’” (Sycamore Ridge Apartments LLC v. Naumann (2007) 

157 Cal.App.4th 1385, 1399 (Sycamore Ridge).)8

 

8 The brothers argue that a voluntary dismissal constitutes a prima facie showing 

of favorable termination sufficient to defeat an anti-SLAPP motion, citing Sycamore 

Ridge and Oviedo v. Windsor Twelve Properties, LLC (2012) 212 Cal.App.4th 97 
16.

Here, the brothers have not shown that the dismissal of Mary Kay’s claims against 

them in the underlying action reflected their innocence of the misconduct alleged therein. 

The record instead demonstrates Mary Kay dismissed her claims for reasons unrelated to 

the substantive merits. In support of the anti-SLAPP motion, Smith submitted evidence 

he had confidence in the merits of the claims against the brothers in the underlying 

action, but he recommended that Mary Kay dismiss the brothers strictly for economic 

reasons. As a result of the settlement with Calone, Mary Kay was relieved of any 

obligation to pay for Calone’s fees that arose from the preparation of the disclaimer and 

indemnity agreements, as well as the Heggstad petition. Since Mary Kay’s claims 

against her brothers arose out of her potential liability under the Indemnity Agreement, 

Calone’s waiver of his fee claim negated Mary Kay’s need to rescind the agreement to 

avoid those fees. While Mary Kay could continue the action to try to recover the attorney 

fees she incurred in the underlying action, Smith determined it would not be beneficial 

for Mary Kay to incur additional litigation costs and fees to do so, particularly in light of 

Mary Kay’s desire to limit the continued cost of litigation. 

In our view, the voluntary dismissal of an underlying action does not reflect the 

merits when the undisputed evidence shows it was based on a sound financial decision. 

As the court explained in Oprian v. Goldrich, Kest & Associates (1990) 220 Cal.App.3d 

337, 344-345 (Oprian): “It would be a sad day indeed if a litigant and his or her attorney 

 

(Oviedo). While the court in Sycamore Ridge did state that “a voluntary dismissal is 

presumed to be a favorable termination on the merits, unless otherwise proved to a jury” 

(Sycamore Ridge, supra, 157 Cal.App.4th at p. 1400), the case does not stand for the 

proposition that the nature of a voluntary dismissal is always a jury question; instead, that 

depends on whether a conflict arises as to the circumstances of the termination. (Id. at 

p. 1399.) In Oviedo, while the court stated it was “possible to infer that the action was 

terminated favorably” to the plaintiff from the fact that the underlying action had been 

voluntarily dismissed without prejudice, the court further explained that there was other 

evidence to support the plaintiff’s position, and the defendants’ evidence that the action 

was not terminated in the plaintiff’s favor merely raised a conflict as to the reasons 

behind the termination. (Oviedo, supra, 212 Cal.App.4th at pp. 112-113.) 
17.

could not dismiss an action to avoid further fees and costs, simply because they were 

fearful such a dismissal would result in a malicious prosecution action. It is common 

knowledge that costs of litigation, such as attorney’s fees, costs of expert witnesses, and 

other expenses, have become staggering. The law favors the resolution of disputes. 

‘This policy would be ill-served by a rule which would virtually compel the plaintiff to 

continue his litigation in order to place himself in the best posture for defense of a 

malicious prosecution action.’” (See Drummond v. Desmaris (2009) 176 Cal.App.4th 

439, 456-457 [distinguishing Oprian and finding trier of fact could reject vague 

declaration stating dismissal was for financial reasons “based upon its own contents and 

surrounding circumstances,” including pro per status of declarant and appellate decision 

adversely affecting case].)

The brothers argue Smith’s explanations are not credible. Their arguments, 

however, are conjectural rather than evidentiary.

First, the brothers speculate the dismissal was not for economic reasons since the 

Calone settlement did not satisfy Mary Kay’s litigation objectives of obtaining economic 

and non-economic damages that Mary Kay and Kay alleged were certain to exceed 

$500,000, as well as punitive damages, and of rescinding the Indemnity Agreement that 

obligated Mary Kay to indemnify Kay and the brothers from future liability apart from 

her obligation to pay for the Heggstad petition. While the Indemnity Agreement covered 

more than the Heggstad petition, it is apparent that Mary Kay’s primary litigation 

objective was to relieve herself of responsibility for paying Calone’s fees arising from the 

petition. The non-economic and punitive damages Mary Kay claimed resulted from 

Calone’s enormous legal fees; once his fee claim was resolved, she no longer needed to 

rescind the Indemnity Agreement or seek damages for her physical and emotional 

distress. Even when a case has merit a plaintiff may not be able to recover for all the 

damages she claims to have suffered and the defendant’s conduct or financial status may 

not justify an award of punitive damages. The recovery of such items from the brothers 
18.

was questionable and foregoing a potential recovery, including a potential rescission of 

the Indemnity Agreement, in lieu of incurring additional attorney fees and costs does not 

signify a belief in the brothers’ innocence. 

The brothers also point to demands made after the settlement with Calone which 

they assert showed Mary Kay’s litigation objectives consisted of more than being 

relieved of Calone’s fees, and instead revealed her desire to obtain her brother’s real 

property worth millions of dollars. The only evidence the brothers point to on this point, 

however, is Lapcevic’s declaration, in which he states that when Kay’s attorney, Zeff, 

told him about the settlement between Calone, Kay and Mary Kay, Zeff stated: the 

brothers would “now have to defend against their mother and sister’s claims without the 

benefit of an insurance company picking up the costs”; Zeff and Smith would take the 

case to trial on Mary Kay’s and Kay’s behalf in an expeditious manner; should they 

prevail at trial, Mary Kay would end up owning all of the brothers’ property; and 

Lapcevic needed to tell his clients that it would get very expensive for them if they did 

not come to their senses and reach a settlement. Zeff’s statements, however, do not cast 

doubt on Smith’s claim that Mary Kay had been made whole through Calone’s waiver of 

his fees. Instead, they show the ultimate outcome of the litigation should Kay’s claims 

succeed, namely that Kay would obtain the brothers’ property through rescission of the 

disclaimer documents which she would then pass to Mary Kay on her death.

The brothers next assert that Mary Kay’s litigation objectives were not satisfied 

because she continued her lawsuit against her brothers after she dismissed Calone. 

Smith, however, explained in his declaration in support of the anti-SLAPP motion that he 

delayed in dismissing the brothers because he was assessing the economic feasibility of 

continuing to litigate the claims against them. Smith’s explanation is bolstered by his 

declaration filed in opposition to the brothers’ motion for leave to file the crosscomplaint, as well as his supplemental declaration on the anti-SLAPP motion, in which 

he stated that the attorneys for the Calone defendants offered to include in the dismissals 
19.

they created a dismissal of the entire action for Mary Kay as to all defendants, but later 

retracted the offer.9 That Smith delayed in dismissing the brothers does not mean Smith 

ultimately dismissed them because he believed the case lacked merit. By dismissing the 

brothers a mere 15 days after Calone, Mary Kay was in the same situation she would 

have been in had she dismissed them at the same time she dismissed Calone.

We also disagree that the timing of the dismissal constitutes Mary Kay’s implicit 

concession the underlying action lacked merit. The brothers assert that Mary Kay’s 

primary desire in dismissing them was to thwart their “right to file their cross-complaint 

against her.” Even if the brothers were dismissed in order to prevent the filing of a crosscomplaint, that does not mean that Mary Kay or Smith lost confidence in her own claims; 

instead it affirms Smith’s assertion that the brothers were dismissed to avoid further 

litigation costs. Moreover, the record shows, contrary to the brothers’ representations, 

that their dismissal did not play a role in Smith’s opposition to their motion for leave to 

file the cross-complaint or the trial court’s denial of that motion. In opposing the motion, 

Smith argued Mary Kay would be prejudiced, not because she dismissed her brothers, but 

because she had dismissed Calone, who was the only party she could obtain indemnity 

from should her brothers’ prevail on their claims in the cross-complaint. The trial court 

denied the motion, not because the brothers were dismissed, but because the motion was 

untimely, would prejudice Mary Kay in view of her dismissal of Calone, and the 

deposition transcripts filed with the motion did not provide a “sufficient basis” to permit 

the cross-complaint. The brothers assert that dismissal in the face of a threatened adverse 

event may constitute a favorable termination, citing Citi-Wide Preferred Couriers, Inc. v. 

 

9 Calone’s attorney, LaVoie, declared that she offered to prepare separate requests 

for dismissals for Kay and Mary Kay, obtain counsel’s signatures and file them with the 

court, and, as instructed by Zeff, both dismissals were with prejudice and dismissed only 

the claims against Calone. LaVoie does not contradict Smith’s claim that Calone’s 

attorney retracted the offer to include the brothers in the Calone release. 
20.

Golden Eagle Ins. Co. (2004) 114 Cal.App.4th 906, 914-915 (Citi-Wide). Dismissing an 

action in the face of an untimely motion for leave to file a cross-complaint, however, is a 

far cry from what occurred in Citi-Wide, where the defendant in a malicious prosecution 

action abandoned its underlying lawsuit on the day of trial when it learned the plaintiff 

was going to contest the matter.

The brothers also argue doubt should be cast on Smith’s explanation that the 

brothers were dismissed to avoid accumulating additional litigation costs because Mary 

Kay was not paying Smith’s fees, which were being paid out of the Insurance Trust. 

Even if true, this is not inconsistent with Mary Kay’s desire to limit the cost of litigation 

or to avoid incurring additional fees and costs.

Finally, the brothers assert that Smith’s declaration is inadequate by itself to 

establish that Mary Kay dismissed her brothers for financial reasons only. They contend 

Smith was required to produce Mary Kay’s declaration that evidences her opinion and 

rationale for dismissing them and, without such declaration, Smith’s declaration at best 

creates a triable issue of fact. The cases they rely on, Fuentes v. Berry (1995) 

38 Cal.App.4th 1800, 1808 and Weaver v. Superior Court (1979) 95 Cal.App.3d 166, 

185, however, do not support this proposition; they merely state the general rule that “[i]f 

a conflict arises as to the circumstances explaining a failure to prosecute an action 

further, the determination of the reasons underlying a voluntary dismissal is a question of 

fact.” (Fuentes, supra, 38 Cal.App.4th at p. 1808; Weaver, supra, 95 Cal.App.3d at 

p. 185, disapproved on other grounds in Sheldon Appel Co. v. Albert & Oliker (1989) 

47 Cal.3d 863, 882-883.) But as we have explained, there is no conflict as to the 

circumstances explaining Mary Kay’s failure to prosecute the action further, as there is 

no evidence which supports an inference that the brothers were dismissed because Smith 

or Mary Kay did not believe the claims against them had merit. Certainly, there is no 

prima facie showing of facts demonstrating the brothers sustained a favorable termination 

on the merits.
21.

As the brothers’ evidence raised no question of fact for a jury on the favorable 

termination element of a malicious prosecution action, the trial court’s ruling in Smith’s 

favor on the anti-SLAPP motion was correct. Given this, we are not required to discuss 

the elements of lack of probable cause and malice. 

Smith requests statutory attorney fees on appeal. (§ 425.16, subd. (c)(1).) It is 

established that when a party is entitled to attorney fees, they are available for services at 

trial and on appeal. (Morcos v. Board of Retirement (1990) 51 Cal.3d 924, 927.) Smith 

is the prevailing party on appeal, and thus is entitled to attorney fees. Accordingly, we 

will remand the matter to the trial court for it to determine Smith’s fees. (Security Pacific 

National Bank v. Adamo (1983) 142 Cal.App.3d 492, 498 [“Although this court has the 

power to fix attorney fees on appeal, the better practice is to have the trial court 

determine such fees when it determines costs on appeal.”].)

DISPOSITION

The judgment is affirmed and the matter remanded to the trial court for its 

determination of an attorney fees award to Smith for the appeal. Smith is also entitled to 

costs on appeal.

_____________________

GOMES, J.

WE CONCUR:

_____________________

HILL, P.J.

_____________________

SMITH, J.