Opinion ID: 2583949
Heading Depth: 2
Heading Rank: 2

Heading: Liability for Continuing to Prosecute Lawsuit Found to Lack Merit

Text: Previously, this court has characterized one of the elements of the tort of malicious prosecution as commencing, bringing, or initiating an action without probable cause. `To establish a cause of action for the malicious prosecution, of a civil proceeding a plaintiff must plead and prove that the prior action (1) was commenced by or at the direction of the defendant and was pursued to a legal termination in his, plaintiff's, favor [citations]; (2) was brought without probable cause [citations]; and (3) was initiated with malice [citations].' ( Bertero [v. National General (1974) 13 Cal.3d 43,] 50, 118 Cal.Rptr. 184, 529 P.2d 608 [( Bertero )]. ( Crowley v. Katleman (1994) 8 Cal.4th 666, 676, 34 Cal.Rptr.2d 386, 881 P.2d 1083 ( Crowley ), italics added.) Defendants contend continuing to prosecute a lawsuit discovered to lack probable cause does not constitute the tort of malicious prosecution, and in making this argument they rely heavily on the torts being a disfavored cause of action. The tort of malicious prosecution is disfavored both because of its `potential to impose an undue chilling effect on the ordinary citizen's willingness to report criminal conduct or to bring a civil dispute to court' [( Sheldon Appel Co. v. Albert Oliker (1989) 47 Cal.3d 863, 872, 254 Cal.Rptr. 336, 765 P.2d 498 ( Sheldon Appel Co. )]) and because, as a means of deterring excessive and frivolous lawsuits, it has the disadvantage of constituting a new round of litigation itself ( id. at p. 873, 254 Cal.Rptr. 336, 765 P.2d 498). ( Wilson, supra, 28 Cal.4th at p. 817, 123 Cal.Rptr.2d 19, 50 P.3d 733.) For these reasons, we have declined to extend the scope of the tort. ( Crowley, supra, 8 Cal.4th at p. 680, 34 Cal.Rptr.2d 386, 881 P.2d 1083; Sheldon Appel Co., at p. 873, 254 Cal.Rptr. 336, 765 P.2d 498.) On the other hand, we have cautioned that this convenient phrase, i.e., the characterization of malicious prosecution as a disfavored cause of action, should not be employed to defeat a legitimate cause of action or to invent [ ] new limitations on the substantive right, which are without support in principle or authority. ( Bertero, supra, 13 Cal.3d at p. 53, 118 Cal.Rptr. 184, 529 P.2d 608; see Crowley, supra, 8 Cal.4th at p. 680, 34 Cal.Rptr.2d 386, 881 P.2d 1083.) Confining the tort of malicious prosecution to the initiation of a suit without probable cause would be, we conclude, without support in authority or in principle.
The question we address today is a question of first impression in this court, and was first addressed by a California Court of Appeal only two years ago. [5] However, so far as our research reveals, the rule in every other state that has addressed the question is, and in many states has long been, that the tort of malicious prosecution does include continuing to prosecute a lawsuit discovered to lack probable cause. Over 25 years ago the drafters of the Restatement Second of Torts (Restatement) stated that one who continues a civil proceeding that has properly been begun or one who takes an active part in its continuation for an improper purpose after he has learned that there is no probable cause for the proceeding becomes liable as if he had then initiated the proceeding. (Rest., 674, com. c, p. 453.) [6] Indeed, almost 80 years ago Corpus Juris, in reciting the elements of an action for malicious prosecution, stated the first element as the commencement or continuance of an original criminal or civil judicial proceeding. (38 C.J. (1925) Malicious Prosecution, 5, p. 386, italics added; see 34 Am.Jur. (1941) Malicious Prosecution, 26, p. 718.) [7] The Restatement's position on this question has been adopted or was anticipated by the courts of a substantial number of states: Alabama ( Laney v. Glidden Co., Inc. (1940) 239 Ala. 396, 194 So. 849, 851-852); Arizona ( Smith v. Lucia (Ct.App.1992) 173 Ariz. 290, 842 P.2d 1303, 1308); Arkansas ( McLaughlin v. Cox (1996) 324 Ark. 361, 922 S.W.2d 327, 331-332); Colorado ( Slee v. Simpson (1932) 91 Colo. 461, 15 P.2d 1084, 1085); Idaho ( Badell v. Beeks (1988) 115 Idaho 101, 765 P.2d 126, 128); Iowa ( Wilson v. Hayes (Iowa 1990) 464 N.W.2d 250, 264); Kansas ( Nelson v. Miller (1980) 227 Kan. 271, 607 P.2d 438, 447-448); Mississippi ( Benjamin v. Hooper Electronic Supply Co., Inc. (Miss.1990) 568 So.2d 1182, 1189, fn. 6); New York ( Broughton v. State of New York (1975) 37 N.Y.2d 451, 457, 373 N.Y.S.2d 87, 335 N.E.2d 310); Ohio ( Siegel v. O.M. Scott & Sons Co. (Ohio Ct.App.1943) 73 Ohio App. 347, 56 N.E.2d 345, 347); Oregon ( Wroten v. Lenske (1992) 114 Or.App. 305, 835 P.2d 931, 933-934); Pennsylvania ( Wenger v. Philips (1900) 195 Pa. 214, 45 A. 927); and Washington ( Banks v. Nordstrom, Inc. (1990) 57 Wash.App. 251, 787 P.2d 953, 956-957). Even more significantly, defendants have not brought to our attention, nor has our own research revealed, a single state that has declined to adopt the Restatements view in this regard. Defendants' position, that the tort of malicious prosecution does not include continuing a lawsuit discovered to lack probable cause, is no more supported by the decisions of this court than it is by out-of-state authority. Defendants rely upon two decisions of Division Seven of the Second District  Swat-Fame, supra, 101 Cal.App.4th 613, 124 Cal.Rptr.2d 556 and Vanzant, supra, 96 Cal.App.4th 1283, 118 Cal.Rptr.2d 48. In Swat-Fame, the plaintiff in a malicious prosecution action contended a party can be held liable for malicious prosecution even if he or she first becomes aware of facts that negate the claim after the litigation is commenced. . . . ( Swat-Fame, at pp. 627-628, 124 Cal.Rptr.2d 556.) Reiterating the position it had taken five months earlier in Vanzant, Division Seven of the Second District Court of Appeal rejected the contention. ( Id. at p. 628, 124 Cal.Rptr.2d 556.) Vanzant relied upon this courts decision in Coleman v. Gulf Ins. Group (1986) 41 Cal.3d 782, 226 Cal.Rptr. 90, 718 P.2d 77 ( Coleman ) for the proposition that California courts have typically refused to permit malicious prosecution claims where, as here, the claim is based on the continuation of a properly initiated existing proceeding. ( Vanzant, at pp. 1290-1291, 118 Cal.Rptr.2d 48.) Coleman is distinguishable. In order to establish a cause of action for malicious prosecution, a plaintiff must prove `the prior action . . . was commenced by or at the direction of the defendant [in the malicious prosecution action].' [Citation.] ( Coleman, supra, 41 Cal.3d at p. 793, 226 Cal.Rptr. 90, 718 P.2d 77, italics added.) In Coleman, the underlying action was commenced by the plaintiffs in the malicious prosecution action. Therefore, in order to establish their cause of action against the defendant's insurer for malicious prosecution, the plaintiffs argued that the insurer, in maliciously causing the defendant to file a frivolous appeal, caused the initiation of a separate action. This is the argument the Coleman court rejected. In the underlying action in Coleman, the survivors of a man who drowned in a city swimming pool brought a wrongful death action against the city and were awarded $350,000 in damages. During the pendency of the city's appeal, the city's insurer offered the plaintiffs less than half the judgment award to settle, and plaintiffs declined, but later accepted a settlement of $300,000. The plaintiffs then sued the insurer, which allegedly controlled all aspects of the defense, on the ground, among others, of malicious prosecution, claiming the appeal had been frivolous, designed solely to force the plaintiffs to settle for a fraction of the judgment and to enable the insurer to realize interest earnings during the pendency of the appeal based on the differential between the statutory rate of interest and the market rate. ( Coleman, supra, 41 Cal.3d at pp. 788-789, 226 Cal.Rptr. 90, 718 P.2d 77.) The Coleman court distinguished Bertero, supra, 13 Cal.3d 43, 118 Cal.Rptr. 184, 529 P.2d 608. In Bertero, this court held malicious prosecution may include maliciously filing a cross-complaint. By seeking affirmative relief [through a cross-complaint], the Bertero court pointed out, the defendants . . . did more than attempt to repel [the plaintiff's] attack; they took the offensive in attempting to prosecute a cause of action of their own. ( Bertero, at p. 53, 118 Cal.Rptr. 184, 529 P.2d 608.) By contrast, the Coleman court held, filing an appeal `is not a separate proceeding and has no independent existence' [citation]; it is merely the continuation of an action. [Citation.] Based on the reasoning of Bertero, a defendant's appeal cannot be considered a separate action `seeking affirmative relief,' but rather is merely the continuation of an attempt `to repel' plaintiff's attack. ( Coleman, supra, 41 Cal.3d at p. 794, 226 Cal.Rptr. 90, 718 P.2d 77, fn. omitted.) The operative distinction, then, is between continuing a prosecution and continuing a defense. In Coleman, the defendant in the malicious prosecution action had merely continued its defense of the underlying wrongful death action by causing the filing of the appeal in that action. [8] Here, according to the evidence presented in opposition to the anti-SLAPP motion, defendants in the malicious prosecution action continued their prosecution of the underlying fraud action after learning it was baseless.
Just as it is without support in authority, the limitation defendants urge is also without support in principle. Malicious prosecution is actionable because it harms the individual against whom the claim is made, and also because it threatens the efficient administration of justice. ( Bertero, supra, 13 Cal.3d at p. 50, 118 Cal.Rptr. 184, 529 P.2d 608; see Crowley, supra, 8 Cal.4th at p. 677, 34 Cal.Rptr.2d 386, 881 P.2d 1083.) Continuing an action one discovers to be baseless harms the defendant and burdens the court system just as much as initiating an action known to be baseless from the outset. (See 1 Harper et al., The Law of Torts (3d ed.1996) § 4.3, p. 4:13 [Clearly, it is as much a wrong against the victim and as socially or morally unjustifiable to take an active part in a prosecution after knowledge that there is no factual foundation for it, as to instigate such a proceeding in the first place].) As the Court of Appeal in this case observed, It makes little sense to hold attorneys accountable for their knowledge when they file a lawsuit, but not for their knowledge the next day. Moreover, as the Court of Appeal went on to point out, Holding attorneys liable for the damages a party incurs as a result of the attorneys prosecuting civil claims after they learn the claims have no merit also will encourage voluntary dismissals of meritless claims at the earliest stage possible. Because an attorney will be liable only for the damages incurred from the time the attorney reasonably should have caused the dismissal of the lawsuit after learning it has no merit, an attorney can avoid liability by promptly causing the dismissal of, or withdrawing as attorney in, the lawsuit. This will assist in the efficient administration of justice and reduce the harm to individuals targeted by meritless claims. Moreover, by advising a client to dismiss a meritless case, the attorney will serve the client's best interests in that the client will avoid the cost of fruitless litigation, and the client's exposure to liability for malicious prosecution will be limited. Defendants contend our holding  that malicious prosecution includes continuing to prosecute a lawsuit discovered to lack probable cause  would be unworkable and therefore contrary to public policy. Defendants assert the holding would be unworkable because it would divert an attorney's attention away from the zealous representation of his or her client by causing the attorney (1) continually to second-guess the merits of the litigation and (2) to fear retaliation for malicious prosecution if the attorney argues for an extension of the law. We disagree. Only those actions that any reasonable attorney would agree are totally and completely without merit may form the basis for a malicious prosecution suit. ( Wilson, supra, 28 Cal.4th at p. 817, 123 Cal.Rptr.2d 19, 50 P.3d 733; Sheldon Appel, supra, 47 Cal.3d at p. 886, 254 Cal.Rptr. 336, 765 P.2d 498.) The same standard will apply to the continuation as to the initiation of a suit. Applying the standard in any given case may be very difficult. However, applying it to the decision to continue to prosecute a case should be no more or less difficult than applying it to the decision to initiate a case. [9] For the reasons stated, we conclude an attorney may be held liable for malicious prosecution for continuing to prosecute a lawsuit discovered to lack probable cause.