Court Opinion

ID: 4652858
Source: CourtListenerOpinion
Date Created: 2021-01-20 21:02:27.406381+00
Date Added: 2024-06-11T08:01:50.329033
License: Public Domain

Filed 1/20/21 Waterhouse Management Corp. v. Allen CA2/6
     NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 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has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                         SECOND APPELLATE DISTRICT

                                         DIVISION SIX

WATERHOUSE                                                   2d Civil No. B303365
MANAGEMENT CORP. et al.,                                 (Super. Ct. No. 17CV05698)
                                                           (Santa Barbara County)
     Plaintiffs and Appellants,

v.

ARTHUR A. ALLEN et al.,

     Defendants and Respondents.

      Appellant Waterhouse Management Corp. is the property
manager of Nomad Village Mobile Home Park (the Park), a 150-
space mobile home park in Santa Barbara County. Appellant
Lazy Landing MHP, LLC, is the owner of the Park’s long-term
ground lease. Appellants filed a complaint against the Park’s
homeowners (respondents). Appellants appeal from the trial
court’s order striking their fourth cause of action as a strategic
lawsuit against public participation (SLAPP) pursuant to Code of
Civil Procedure section 425.16 (the anti-SLAPP statute). The
fourth cause of action alleged that respondents had maliciously
prosecuted an administrative proceeding before the California
Public Utilities Commission (PUC).
       The trial court granted the anti-SLAPP motion because
appellants had failed to show that the prior administrative
proceeding had been terminated in their favor. Such a favorable
termination is one of the elements of a cause of action for
malicious prosecution. Appellants contend that the trial court
erred. We disagree and affirm.
      The Administrative Proceeding Underlying Appellants’
          Fourth Cause of Action for Malicious Prosecution
       Respondents’ PUC complaint alleged that appellants had
imposed a rent-controlled rental increase to recover costs
incurred in abating electrical code violations at the Park.
Respondents claimed that appellants were required “to assume
responsibility for payment of all abatement costs” and could not
pass the costs through to the homeowners. In support of their
claim, respondents cited Health and Safety Code section 18420,
subdivision (a)(3), which provides, “The owner or operator of the
mobilehome park shall be responsible for the correction of any
violations for which a notice of violation has been given pursuant
to this subdivision.” Respondents requested that the PUC (1)
answer four questions relating to the controversy, and (2)
instruct appellants to rescind the rental increase and refund
amounts collected pursuant to the increase.
       In their answer to the complaint, appellants contended that
the matter was not properly before the PUC because the validity
of the rental increase was being litigated in an arbitration
proceeding under the Santa Barbara County Mobilehome Rent
Control Ordinance (the Ordinance). Appellants argued that the
existence of both the PUC and arbitration proceedings “runs the

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risk of inconsistent results and/or piecemeal adjudication of
issues. Accordingly, [the] Complaint cannot and should not
proceed in light of [respondents’] other action pending . . . .”
Appellants also maintained that the PUC “lacks jurisdiction over
the subject matter” because the rental increase issue arises under
the Ordinance “and is not a matter arising under the [PUC] law.”
       In its decision the PUC noted that the arbitrator had
upheld appellants’ rental increase and that respondents had
requested review of the arbitrator’s ruling by the Board of
Supervisors of Santa Barbara County. Respondents “assert[ed]
that any ruling by the Board of Supervisors may be appealed by
way of an administrative writ of mandate to the Santa Barbara
County Superior Court.”
       For several reasons, the PUC dismissed respondents’
complaint without prejudice. The first reason was that the
complaint was “not ripe for resolution because the factual record
[was] not complete.” The PUC explained: “Since the current
status of the Rent Control Arbitration Proceeding, and what was
ultimately resolved, remains unclear, the [PUC] is not in a
position to determine if the relief [respondents] are seeking in
this proceeding is duplicative of the relief [they] sought in the
Rent Control Arbitration Proceeding. . . . [The PUC] will not
endeavor to resolve a dispute based on a partial record.” “Until
there is a complete record as to the final resolution of the Rental
Control Arbitration Proceeding, there is no apparent current
need for the [PUC] to interject itself into this proceeding.”
       The second reason was that “the complaint seeks a
combination of impermissible advisory and declaratory opinions.”
(Bold and Capitalization omitted.) The complaint “asks a series
of four questions that seek either advice or declaratory

                                3
determination, but does not set forth [respondents’] positions and
the applicable law that supports each position. . . . [¶] . . . [T]he
[PUC] has dismissed complaints that sought similar advisory
opinions.”
       The PUC advised respondents as to how they might revise
the first question so that it would not constitute a request for an
impermissible advisory opinion. The first question asked, “Does
[PUC] jurisdiction pre-empt state law requiring management to
assume responsibility for all code violation abatement costs,
including common area costs?” The PUC suggested:
“[Respondents] should state if they contend this is a case of
[PUC] preemption of state law and set forth the authorities [that]
support that position. [Respondents] should also state why they
are raising a question of [PUC] preemption if, as they have
claimed, the issues before the [PUC] are different than the issues
before the Rent Control Arbitration Proceeding.”
       As to respondents’ three remaining questions, the PUC said
they are “problematic” because “[t]hey are phrased in a manner
that asks the [PUC] to determine the parties’ rights i.e.
declaratory relief.” “[Respondents] need to revise their complaint
and clearly set forth their positions on each of these three
questions with the appropriate support[ing] legal authorities
cited.”1

      1 The three remaining questions were: “[1]. Are attorney
and professional fees relating to submetered utilities included in
‘administrative and general expenses’ for the purposes of [PUC
Decision] 0404043, Attachment A? [¶] [2]. Is a replacement
service extension to upgrade a space serviced for 50+ years
considered ‘expansion of the network for areas yet to be serviced
by the utility’? [¶] [3]. Are costs – including, but not limited to,
engineering and professional fees, permits, and plot plans –

                                  4
       The third reason for dismissing the complaint was that
respondents “do not explain why they are entitled to . . . relief
[from the rental increase], what law supports their claims, and
how the [four] questions [asked] support their claims for relief.
Furthermore, [respondents] fail to square their request with the
fact that Attachment A to [PUC Decision] 04-04-043 vested the
authority to local rental boards to rule on costs passed through to
tenants via rental increases.”
        The PUC said that a refiled complaint must (1) provide “a
complete recounting” of all events relating to the arbitration
proceeding; (2) not include a request for an advisory or
declaratory opinion; (3) “[e]xplain, in detail, how [the] complaint
before the [PUC] is distinct from the Arbitration Proceedings”;
and (4) “[e]xplain, in detail why the [PUC’s] Decision 04-04-043,
Attachment A, doesn’t preclude [respondents] from challenging,
before the [PUC], the rental increases that are the subject of the
instant complaint.” Respondents did not refile their complaint.
       Elements of Cause of Action for Malicious Prosecution
       “To establish a cause of action for malicious prosecution, a
plaintiff must demonstrate that the prior action (1) was initiated
by or at the direction of the defendant and legally terminated in
the plaintiff's favor, (2) was brought without probable cause, and
(3) was initiated with malice.” (Siebel v. Mittlesteadt (2007) 41
Cal.4th 735, 740 (Siebel), italics added.) “[A]n action for
malicious prosecution may [as here] be founded upon the
institution of a proceeding before an administrative agency.”
(Hardy v. Vial (1957) 48 Cal.2d 577, 581.)

relating to the electric and gas submetered system included in
‘administrative and general expenses’ for the purposes of [PUC
Decision] 0404043, Attachment A?”

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                    Malicious Prosecution: Element of
                    Termination in Plaintiff’s Favor
        “‘“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].”
[Citation.] Thus, “[i]t is hornbook law that the plaintiff in a
malicious prosecution action must plead and prove that the prior
. . . proceeding of which he complains terminated in his favor.”
[Citation.]’ [Citation.]” (Siebel, supra, 41 Cal.4th at p. 741.)
        “To determine whether a party has received a favorable
termination, we consider ‘“the judgment as a whole in the prior
action . . . .” [Citation.]’ [Citation.] Victory following a trial on
the merits is not required. Rather, ‘“the termination must reflect
the merits of the action and the plaintiff’s innocence of the
misconduct alleged in the lawsuit.” [Citation.]’ [Citation.]”
(Siebel, supra, 41 Cal.4th at p. 741.)
        “‘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 it
would support a subsequent action for malicious prosecution.’
[Citation.] Thus, a ‘technical or procedural [termination] as
distinguished from a substantive termination’ is not favorable for
purposes of a malicious prosecution claim. [Citation.]” (Casa
Herrera, Inc. v. Beydoun (2004) 32 Cal.4th 336, 342 (Casa
Herrera).) For example, “a dismissal for lack of jurisdiction does
not involve the merits and cannot constitute a favorable
termination.” (Cantu v. Resolution Trust Corp. (1992) 4
Cal.App.4th 857, 882.)

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       “When the proceeding terminates other than on the merits,
the court must examine the reasons for termination to see if the
disposition reflects the opinion of the court or the prosecuting
party that the action would not succeed. If resolution of the
underlying action leaves a residue of doubt about the plaintiff's
innocence or liability, it is not a favorable termination sufficient
to support a cause of action for malicious prosecution.” (Sierra
Club Foundation v. Graham (1999) 72 Cal.App.4th 1135, 1149
(Sierra Foundation).)
                       The Anti-SLAPP Statute
       “A SLAPP suit . . . seeks to chill or punish a party’s exercise
of constitutional rights to free speech and to petition the
government for redress of grievances. [Citation.] The
Legislature enacted Code of Civil Procedure section 425.16—
known as the anti-SLAPP statute—to provide a procedural
remedy to dispose of lawsuits that are brought to chill the valid
exercise of constitutional rights.” (Rusheen v. Cohen (2006) 37
Cal.4th 1048, 1055-1056.)
        “‘To prevail on an anti-SLAPP motion, the movant must
first make “‘a threshold showing that the challenged cause of
action’ arises from [protected activity] in connection with a public
issue [the first prong].” [Citation.] Once the movant meets this
burden, the plaintiff must demonstrate “‘a probability of
prevailing on the claim [the second prong].’” [Citation.] If the
plaintiff cannot meet this burden, the trial court must strike the
cause of action. [Citation.]’” (Christian Research Institute v.
Alnor (2007) 148 Cal.App.4th 71, 80.)
       Here, we are concerned only with the second prong.
Appellants do not contend that respondents failed to make the
threshold showing required under the first prong.

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          Appellants Did Not Demonstrate a Probability of
           Satisfying the Favorable Termination Element
       The PUC’s order dismissing the complaint without
prejudice did not satisfy the requirement that “‘“the termination
must reflect the merits of the action and the plaintiff's innocence
of the misconduct alleged in the lawsuit.” . . . ’” (Siebel, supra, 41
Cal.4th at p. 741.) The gravamen of respondents’ complaint was
that appellants had improperly passed through to the
homeowners the cost of abating electrical code violations. The
termination of the administrative proceeding cannot reasonably
be interpreted as exonerating appellants from this alleged
misconduct. The PUC concluded that the complaint “is not
properly phrased and prevents the [PUC], at present, from
making any decisions regarding its purported merits.” (Italics
added.) The PUC also concluded that “the complaint is not ripe
for resolution because the factual record is incomplete.” The PUC
permitted respondents to refile the complaint provided that they
“cure all of the deficiencies identified [by the PUC] in [its]
decision.” The PUC did not opine that the deficiencies were
incurable.
       Thus, the complaint was dismissed for procedural, not
substantive reasons. A “procedural [termination] as
distinguished from a substantive termination’ is not favorable for
purposes of a malicious prosecution claim.” (Casa Herrera, supra,
32 Cal.4th at p. 342.) The termination here “leaves a residue of
doubt about [appellants’] innocence or liability” and therefore “is
not a favorable termination sufficient to support a cause of action
for malicious prosecution.” (Sierra Club Foundation, supra, 72
Cal.App.4th at p. 1149.) Accordingly, appellants failed to satisfy
their second-prong burden under the anti-SLAPP statute of

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demonstrating a probability that they would prevail on the fourth
cause of action for malicious prosecution.
                            Disposition
      The order granting respondents’ special motion to strike
the fourth cause of action under the anti-SLAPP statute is
affirmed. Respondents shall recover their costs on appeal.
      NOT TO BE PUBLISHED.

                                               YEGAN, J.

We concur:

             GILBERT, P. J.

             PERREN, J.

                                9
                    Pauline Maxwell, Judge

            Superior Court County of Santa Barbara

                ______________________________

     James P. Ballantine and Betty L. Jeppesen, for Plaintiffs
and Appellants.

      Allen, Semelsberger & Kaelin, James C. Allen and Jessica
S. Taylor, for Defendants and Respondents.