Opinion ID: 1172467
Heading Depth: 1
Heading Rank: 3

Heading: Probable Cause for Prosecution of Cross-action

Text: (3) NGC next contends that the judgment should be vacated because clear and uncontradicted evidence establishes that the cross-pleading was filed pursuant to the advice of counsel after the full disclosure of all relevant facts and that a person acting on the advice of counsel indicates that he has proceeded with probable cause and in good faith. Such factors, it is contended, are recognized as a defense to an action for malicious prosecution. ( Johnson v. Southern Pacific Co. (1910) 157 Cal. 333, 338 [107 P. 611]; Brinkley v. Appleby (1969) 276 Cal. App.2d 244, 247 [80 Cal. Rptr. 734]; Masterson v. Pig'n Whistle Corp., supra, 161 Cal. App.2d 323, 339.) However, if the initiator acts in bad faith or withholds from counsel facts he knew or should have known would defeat a cause of action otherwise appearing from the information supplied, that defense fails. ( Dunlap v. New Zealand F. & M.I. Co. (1895) 109 Cal. 365, 370-371 [42 P. 29]; Northrup v. Baker (1962) 202 Cal. App.2d 347, 355 [20 Cal. Rptr. 797]; Hudson v. Zumwalt (1944) 64 Cal. App.2d 866, 875 [149 P.2d 457].) Similarly, counsel's advice must be sought in good faith ( Dunlap, supra, 109 Cal. at p. 370) and ... not as a mere cloak to protect one against a suit for malicious prosecution. ( Walker v. Jensen (1949) 95 Cal. App.2d 269, 274 [212 P.2d 569].) The burden of proving this affirmative defense is, of course, on the party seeking to benefit by it. ( Jackson v. Beckham (1963) 217 Cal. App.2d 264, 272 [31 Cal. Rptr. 739]; Diggs v. Arnold Bros., Inc. (1933) 132 Cal. App. 518, 523 [23 P.2d 71].) The record does not establish that as a matter of law defendants must prevail on this defense. There was substantial evidence that Klein acted in bad faith toward Bertero beginning shortly after the former assumed the presidency of National and continuing through the trial on the instant matter. For example, after Bertero's refusal to negotiate the sale of the remainder of his contract and to relinquish his stock options at the March 13, 1962, meeting, Klein told him that he was going to go all the way in disposing of the matter, and the letter firing Bertero purporting to terminate his stock options and insurance benefits was written after their next meeting. The communication was sent despite Klein's knowledge that the contract had been ratified by a unanimous board of directors including Klein himself (negating the unfair advantage allegation); that Bertero had performed substantial services for National and had covenanted not to compete with the corporation (negating the lack of consideration allegation); and that under the by-laws of National Bertero could have been dismissed without cause at any time by a majority vote of the board of directors (negating the duress allegation). There was also evidence that counsel for defendants in the prior action harbored deep feelings against Bertero permitting the inference that he, too, failed to act in good faith. In a letter to Klein while the appeal in the prior action was pending, the attorney admitted arguing a weak point in his brief ... not because of any high hopes of now winning it, but because I wanted to show the Appellate Court what a bastard Bertero was. Counsel who now represent defendants on appeal did not represent any of defendants either at trial or on appeal in the prior case. It also appears that defendants failed to establish that they informed counsel of specific relevant facts prior to the filing of the cross-action. (See Centers v. Dollar Markets (1950) 99 Cal. App.2d 534, 545 [222 P.2d 136]; Singleton v. Singleton (1945) 68 Cal. App.2d 681, 695 [157 P.2d 886].) Although Klein and counsel testified that all defendants' books and records had been made available, this testimony fails to meet the burden that counsel must be provided with specific facts and not merely unleashed on a hunting expedition. ( Baker v. Gawthorne, supra, 82 Cal. App.2d at p. 500; Schubkegel v. Gordino (1943) 56 Cal. App.2d 667, 672 [133 P.2d 475]; Gordon v. Mount (1932) 125 Cal. App. 701, 706-707 [13 P.2d 932].) The defense based on defendants' allegations that they acted in good faith and fully and fairly advised their counsel prior to initiating the cross-pleading thus fails.