Court Opinion

ID: 9369776
Source: CourtListenerOpinion
Date Created: 2023-02-09 18:02:17.251219+00
Date Added: 2024-06-11T17:16:17.027533
License: Public Domain

Filed 2/9/23 Lincoln Pacific Builders v. Elecnor Belco Electric CA2/7
   NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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has not been certified for publication or ordered published for purposes of rule 8.1115.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 SEVEN

 LINCOLN PACIFIC                                               B312873
 BUILDERS, INC.,
                                                               (Los Angeles County
           Plaintiff and Appellant,                            Super. Ct. No. KC070438)

           v.

 ELECNOR BELCO ELECTRIC,
 INC. et al.,

           Defendants and
           Respondents.

      APPEAL from judgment of the Superior Court of
Los Angeles County, Peter A. Hernandez, Judge. Affirmed.
      Law Office of Mark Ravis & Associates and Mark Ravis for
Plaintiff and Appellant.
      SMTD Law, Marilyn Klinger; Cohen Seglias Pallas
Greenhall & Furman, Edward Seglias, Lane F. Kelman and
Cody M. Wolpert for Defendants and Respondents Elecnor Belco
Eletric, Inc. and Roger Devito.
                   ____________________________
       Lincoln Pacific Builders, Inc. (LPB) sued Elecnor Belco
Electric, Inc. (Belco) and its attorneys Roger Devito and
Bennett W. Root, Jr. for malicious prosecution after successfully
defeating Belco’s cross-complaint in a breach of contract action
initiated by LPB. The trial court granted motions for summary
judgment filed by Belco and Devito and by Root, ruling LPB had
failed to produce any evidence creating a triable issue of material
fact supporting its claim it had been damaged by the filing and
continued prosecution of Belco’s cross-complaint. We affirm.1
      FACTUAL AND PROCEDURAL BACKGROUND
      1. The Parties and Their 2013 Agreements
       LPB, founded in 2004, specialized in outside transportation
electrical work in Southern California, installing streetlights and
traffic signals at intersections and on freeways, primarily as a
subcontractor on public works projects. It was certified as a
minority business enterprise and disadvantaged business
enterprise (MBE/DBE).
       By 2012 LPB was in financial trouble, unable to pay all its
suppliers, its union trust fund obligations or payroll taxes. In
early 2013 its chief executive officer, Lincoln Chan, was
considering selling the company or its assets.2

1     LPB has not appealed the judgment entered in favor of
Root. We refer to him only as occasionally necessary for context.
2     In its opinion affirming the judgment in favor of LPB in the
underlying litigation, our colleagues in Division Eight of this
court stated more emphatically, “[LPB] wanted to get out of the
business as soon as possible.” (Lincoln Pacific Builders, Inc. v.

                                 2
       Belco, a subsidiary of Elecnor, S.A., a publicly traded
Spanish company,3 was in the general commercial electric
business and wanted to expand into the transportation electrical
business.
       As alleged in LPB’s original complaint for breach of
contract, in spring 2013 LPB’s directors authorized LPB’s
purchase by Belco. As a result of the ensuing negotiations,
however, rather than acquiring the entire company outright,
Belco entered into a series of four contracts with LPB (one dated
June 14, 2013, two made on September 10, 2013, and the fourth
on September 12, 2013) to buy LPB’s outstanding transportation
electrical work contracts, equipment and vehicles. In the fourth
contract LPB assigned to Belco “certain work in progress
previously contracted” to LPB, and Belco agreed to pay LPB for
transition expenses LPB incurred in relation to that work. Belco
also hired most of LPB’s workforce, including senior executives
other than Chan.
       Belco made payments to LPB on the initial contracts
totaling $520,000. It failed to make the payment due
September 15, 2013 and made no additional payments prior to
the settlement of LPB’s lawsuit for breach of contract.

Elecnor Belco Electric, Inc. (Aug. 22, 2017, B276956) [nonpub.
opn.].)
3     Belco is a wholly owned subsidiary of Elecnor, Inc., a
wholly owned subsidiary of Elecnor Spain, which, in turn, is a
wholly owned subsidiary of Elecnor, S.A., a publicly traded
corporation.

                                3
      2. The Underlying Litigation
       LPB sued Belco on October 27, 2014 for breach of the
three contracts executed in September 2013, alleging in its
unverified complaint that Belco owed it a total of $513,668. Belco
answered the complaint on December 18, 2014, generally denying
the allegations in LPB’s complaint and asserting 13 affirmative
defenses, including that Belco “possesse[d] legal and equitable
rights to offset against Plaintiff and, accordingly, any recovery by
Plaintiff must be barred or reduced by the amounts of such rights
of offset.”
       Concurrently with its answer Belco also filed a cross-
complaint for breach of oral contract, fraud, breach of fiduciary
duty, common counts and breach of written contract. The cross-
complaint was based on Belco’s allegations that, in addition to
the written contracts, the parties made an oral agreement to form
a joint enterprise so that Belco could acquire jobs on which LPB
had not started to work and take over additional jobs on which
LPB had begun to perform but had not completed the work.
Belco contended LPB breached their oral joint venture agreement
by receiving payments from general contractors that were owed
to Belco and breached its fiduciary duty to Belco by not disclosing
it had received those payments. (The common counts cause of
action sought to recover the sums paid to LPB.) The fraud cause
of action was based on Belco’s claim LPB misrepresented the jobs
Belco would take over had value but, because LPB had advance
billed and was paid for work it had not completed, the projects
were not profitable. The breach of written contract cause of
action alleged LPB had not transferred all the jobs that were the
subject of the initial June 2013 agreement.

                                 4
       The trial court granted LPB’s motion for summary
judgment on the cross-complaint on June 29, 2016, ruling the
integration clauses in the parties’ contracts barred any claim
resting on breach of an oral contract relating to matters covered
in the written contracts; Belco offered no proof of a joint venture
and, thus, no proof that LPB owed Belco any fiduciary duties; the
undisputed evidence established Belco had worked on and
received the full benefit of the seven jobs assigned in the June 14,
2013 agreement; and quasi-contract claims for unjust enrichment
were not properly asserted when express agreements defined the
parties’ rights. (See Lincoln Pacific Builders, Inc. v. Elecnor
Belco Electric, Inc. (Aug. 22, 2017, B276956) [nonpub. opn.].)
       On August 5, 2016 Belco made a Code of Civil Procedure
section 998 offer to compromise, apparently limited to LPB’s
breach of contract claims, which LPB accepted on August 9, 2016.
Pursuant to the terms of their settlement, Belco paid LPB
$513,750, the amount LPB asserted was unpaid under the
parties’ agreements, plus $141,904.07 in interest and $63,814.69
for attorney fees and costs.
       Notwithstanding settlement of LPB’s affirmative claims,
Belco appealed the adverse summary judgment granted by the
trial court on its cross-complaint. The court of appeal affirmed
the judgment on August 22, 2017. (See Lincoln Pacific Builders,
Inc. v. Elecnor Belco Electric, Inc., supra, B276956.) Belco paid
LPB $11,327.00 in July 2018 for LPB’s attorney fees and costs
incurred in connection with Belco’s appeal.
      3. LPB’s Malicious Prosecution Action
      LPB filed the instant action for malicious prosecution on
July 5, 2018, naming as defendants in its unverified complaint
Belco; Root, who LPB alleged represented Belco in its acquisition

                                 5
of LPB’s assets and drafted and filed the cross-complaint; and
Devito, who LPB alleged worked as Belco’s in-house counsel and
advised Root regarding the cross-complaint.4 The complaint
alleged Belco lacked a factual or legal basis to assert any of the
five causes of action in its cross-complaint and had filed the
pleading to punish LPB for bringing the breach of contract action
and to obtain a negotiating advantage, forcing LPB to abandon
its complaint or “agree to a minuscule and unjust settlement.”
According to LPB, at a mediation session shortly after filing its
cross-complaint Belco offered to settle the breach of contract
claim for approximately 10 cents on the dollar, taking the
position its cross-complaint was so strong it owed LPB nothing.
       LPB alleged, on information and belief, that Belco failed to
present full and accurate information to Root and Devito and that
the attorneys failed to adequately investigate the factual and
legal bases for the cross-complaint.
       Describing the damages claimed, LPB alleged it was
“deprived of the monies due under the contracts due to the initial
breach of contract and the subsequent litigation which was
unduly prolonged due to litigating the cross-complaint, including
an appeal filed by Belco.” As a result, LPB alleged, it “was
unable to pay its corporate debts and maintain its good credit,
suffered reputational injury, and was unable to restructure and
competitively bid for new contracts as a minority subcontractor in
the electrical transportation industry. As a consequence, Lincoln
lost profits amounting to millions of dollars.” As made clear in

4     LPB subsequently modified the basis for its claim against
Devito, explaining it was conceded he was involved in Belco’s
appeal of the order granting summary judgment on the cross-
complaint.

                                 6
subsequent proceedings in the trial court, LPB was not seeking
recovery of the attorney fees and costs it had incurred in the
underlying action, as Belco had already paid LPB for those items.
      The trial court denied Belco and Devito’s special motion to
strike (Code Civ. Proc., § 425.16), and they answered the
complaint in July 2019.
       4. The Motions for Summary Judgment
          a. The moving papers
       Belco and Devito moved for summary judgment or, in the
alternative, summary adjudication on November 12, 2020.5 In
their motion Belco and Devito argued LPB’s claim of lost profit
damages was purely speculative and, in any event, any purported
lost profits were not caused by the filing and prosecution of
Belco’s cross-complaint but by Belco’s failure to make timely
payments pursuant to the September 2013 agreements or by the
suspension of LPB’s contractor’s license in mid-2013. They also
argued LPB had not suffered any injury to its reputation as a
result of the cross-complaint. Separately, Devito contended LPB
lacked evidence he had acted with malice.
       In support of their motion Belco and Devito presented
evidence from LPB’s financial statements that the company had
been largely unsuccessful prior to the sale of all its hard assets in
2013: It had sustained losses in six of its nine years in operation
and had generated only minimal profits in the other three years.
Additional evidence presented with the motion showed that
LPB’s contractor’s license had been suspended on June 23, 2013
because its statutorily required contractor’s bond had been

5      Root separately moved for summary judgment the following
day.

                                  7
cancelled—events occurring nearly 18 months before Belco filed
its cross-complaint in the underlying action. The license was not
reinstated until May 2019. Belco and Devito argued LPB could
not bid on work while its license was suspended. Moreover, after
the transaction with Belco, LPB had no trucks, equipment or
tools, and most of its employees left LPB and began to work for
Belco.6
       As for LPB’s claim of reputational damage, Belco and
Devito argued LPB’s only evidence was Chan’s deposition
testimony that he “had heard from various sources that Lincoln
Pacific had cheated Belco.” Chan did not remember when or from
whom he had heard that statement and conceded there was no
documentation to support his recollection. Chan also testified, “I
don’t know for a fact if this was true, but my understanding, the
original source of those sayings came from Walters [Electric
Wholesale].”
          b. LPB’s opposition to the motion
       LPB filed an opposition memorandum with exhibits,
including its tax returns from 2005 to 2013 and the mediation
brief filed by Belco in the underlying litigation, and declarations
from Chan; Erich Engler, an executive with the general
contractor on the Exposition Light Rail Project who had
experience with LPB as a subcontractor; LPB’s counsel, Mark
Ravis; and Sergio Pena, a former employee of LPB.
       In his declaration Ravis stated he had attended the
mediation in the underlying case, during which Belco offered to

6     In his declaration in opposition to the motion Chan added
the fact that in September 2013 LPB relinquished its warehouse
lease “to conserve funds and pay down LPB debts.” As a result,
LPB was no longer eligible for MBE/DBE designation.

                                 8
settle LPB’s contract claims for $75,000 “based on the contention
that, as set forth in its [c]ross-complaint, it was owed substantial
funds by LPB.”
       Chan’s declaration explained LPB aggressively depreciated
assets purchased by the company, which reduced the company’s
taxable income. He posited that net operating cash flow is a
better measure of financial health than reported taxable income.
To demonstrate this point, Chan stated that in 2005 LPB had
taxable income of $17,000 but more than $73,000 in positive cash
flow. He made similar comparisons for taxable income (or loss)
and cash flow for the following eight years, which demonstrated
his company had positive net operating cash flow in seven of its
nine years of operation:
         • 2006: $19,000 taxable income; $306,000 positive cash
            flow.
         • 2007: $5,000 taxable income; $354,000 positive cash
            flow.
         • 2008: $28,000 taxable loss; $248,000 positive cash
            flow.
         • 2009: $54,000 taxable income; $333,000 positive cash
            flow.
         • 2010: $186,000 taxable loss; $34,000 positive cash
            flow.
         • 2011: $261,000 taxable loss; $138,000 negative cash
            flow.
         • 2012: $976,000 taxable loss; $927,000 negative cash
            flow.
         • 2013: $104,000 taxable loss; hypothetical $431,000
            positive cash flow if Belco had not breached its
            agreements with LPB.

                                 9
      According to Chan, what he referred to as “the Great
Recession” hit the public works contracting market in
Los Angeles in 2010. As a result, government contracts were not
being offered, and payments from government entities slowed
down greatly. LPB felt the impact of this economic downturn in
2011, 2012 and 2013.
      Chan declared that it was his plan, assuming Belco had
timely paid the amounts due under its contracts, to pay off LPB’s
debts, maintain LPB’s contractor license in good standing, lease a
warehouse, recertify as a MBE/DBE and pursue contracts with a
reduced work force. To that end, Chan met with Engler to
discuss LPB obtaining a subcontract on the Crenshaw/LAX Light
Rail Project in which Engler was involved and which required
work identical to that LPB had performed on the Exposition
Light Rail Project. According to Chan, he was advised that LPB
would be welcome on the project if it could get its financial
situation resolved.
      Chan’s declaration in opposition to the summary judgment
motion did not amplify the claim of reputational damage to LPB,
simply repeating he had heard (from an unspecified source) that
Walter’s Electric Wholesale had been telling people about LPB’s
fraudulent dealings with Belco. Chan stated, “The source of
Walter’s comments had to be from Belco.”
      In his declaration Engler confirmed he met with Chan
sometime between 2013 and 2016 and would have welcomed a
proposal from LPB, not only because he had been very satisfied
with LPB’s work on the earlier Exposition Light Rail Project, but
also because LPB would have satisfied the new project’s
requirement to attempt in good faith to work with MBE/DBE
subcontractors.

                                10
       Pena declared he left LPB to work with Belco in 2013 but
told Chan that year, if LPB was able to financially restructure, he
was more than willing to rejoin it.
       The bulk of LPB’s opposition memorandum addressed
matters other than causation and damages—the only issues
raised in Belco and Devito’s motion. In the five pages of its
29-page memorandum discussing these two points, LPB argued
in a single sentence, with no reference to any evidence or citation
to legal authority, that to accept the argument LPB suffered no
loss as a result of Belco’s litigation of its cross-complaint “with
the resulting three-year delay in payment of monies due to LPB
would require this court to make a factual determination of a
material fact which is the province of the jury.” The remainder of
its argument on damages asserted that future lost profits are a
recognized form of damages in California; damages need not be
proved with certainty; reasonable methods exist to estimate
LPB’s lost profits; and the jury would be able to take into account
LPB’s history of successful acquisition of contracts and its
designation as a MBE/DBE, the rebound of the economy and the
public works market between 2014 and 2017, and the very real
possibility that LPB would have been selected as a subcontractor
on the Crenshaw/LAX project.
           c. The reply memorandum and evidentiary objections
       In their reply memorandum in support of the motion, Belco
and Devito emphasized that LPB had conceded in its opposition
its alleged lost profits were caused by Belco’s failure to make the
payments due under the parties’ agreements (that is, Belco’s
breach of contract)—damages that began on the date of the first
missed payment in September 2013. Because the cross-complaint
was not filed for more than a year after that date, Belco and LPB

                                11
argued, it was factually and legally impossible for the cross-
complaint to have caused the lost profits. Belco and LPB then
again argued any future profits were wholly speculative, noting,
for example, that Engler did not declare that LPB would have
been awarded a subcontract, LPB did not identify any specific
contracts it lost as a result of Belco’s failure to pay and Chan
conceded that not every subcontract on which it worked was
profitable.
      With their reply brief Belco and Devito also submitted
evidentiary objections to portions of the declarations submitted
with LPB’s opposition papers.
         d. The trial court’s order granting the motion
       The court held a joint hearing on the motions filed by Belco
and Devito and by Root on March 5, 2021 and took the matters
under submission. On March 22, 2021 it issued its written ruling
granting the motions.
             i. The evidentiary rulings
       The court sustained in part and overruled in part the
objections to the declarations of Chan, Ravis and Engler and
overruled the objections to Pena’s declaration. It gave no reasons
for the rulings.
       The sustained objections included those directed to Ravis’s
report of the settlement offer made by Belco during the parties’
mediation and his submission of Belco’s mediation brief as an
exhibit; Chan’s descriptions of the impact of the economic
downturn (“the Great Recession”) on the public works contracting
market in Los Angeles; Chan’s statement he was informed LPB
would be welcomed on the Crenshaw/LAX project if it could get
its financial situation resolved; his statements about how LPB
would have performed if Belco had made timely payments under

                                12
the parties’ contracts; and Chan’s declaration he had heard
Walter’s Electric Wholesale had made negative comments about
LPB’s dealings with Belco and the source for Walter’s comments
“had to be from Belco.” The court also sustained the objections to
Engler’s statements that having LPB on the Crenshaw/LAX
project was “certainly possible once LPB resolved the financial
and legal issues with Belco” and his “expectation” that, if selected
as the subcontractor, LPB would have received on the
Crenshaw/LAX project more than the $20 million gross it
received on the Exposition Light Rail Project.
             ii. The ruling granting the motions
      Noting that LPB’s opposition papers mirrored the
arguments it had made when opposing the defendants’ earlier,
unsuccessful special motions to strike pursuant to Code of Civil
Procedure section 425.16, the court stated, at the summary
judgment stage, LPB “should have evidentiary support beyond
the conclusory statements of ultimate facts contained in the
provided declarations.” As an example, the court stated LPB’s
assertion that DBE/MBE status meant it did not have to bid for
public works contracts did not support its contention that the
cross-complaint caused it harm. To the contrary, the court
reasoned, if anything, it supported the conclusion the cross-
complaint did not cause damages by limiting LPB’s ability to
obtain public works contracts.
      Similarly, the court found that Engler’s declaration did not
provide any certainty that LPB would be awarded a subcontract
for the Crenshaw/LAX project. “A ‘welcoming invite’ does not
reasonably demonstrate the potential of lost profits.” The
declaration, the court found, was full of conjecture and
speculation. Even when interpreted to draw all reasonable

                                 13
inferences in favor of LPB as the nonmoving party, the court
concluded, the declaration was not sufficient to support the claim
that filing and continuing to prosecute the cross-complaint
caused LPB to lose this contract.
       Finally, the court rejected LPB’s contention it would
require a factual determination to rule that there was no damage
at all, as Belco and Devito argued, explaining, “Plaintiff does not
direct the court to any facts that would support this supposed
dispute of fact. Had Plaintiff pointed the court to some actual
evidence, it would have been inclined to find that there is a
material dispute of fact. Because Plaintiff failed to do so, the
court cannot find such a dispute of fact.”
       LPB filed its notice of appeal from the order granting
summary judgment on May 20, 2021. As of that date, no
judgment (that is, no appealable order) had been entered in favor
of Belco and Devito. (See generally Wilkin v. Community
Hospital of Monterey Peninsula (2021) 71 Cal.App.5th 806, 820
[“An order granting summary judgment is not an appealable
order. [Citation.] An appeal must be taken from a judgment
entered based on an order granting summary judgment”].)
Judgment was finally entered on January 3, 2023 at this court’s
instruction.7
                          DISCUSSION
      1. Standard of Review
       A motion for summary judgment is properly granted only
when “all the papers submitted show that there is no triable
issue as to any material fact and that the moving party is entitled
to a judgment as a matter of law.” (Code Civ. Proc., § 437c,

7     An amended judgment was entered on January 4, 2023.

                                14
subd. (c).) We review a grant of summary judgment de novo
(Samara v. Matar (2018) 5 Cal.5th 322, 338) and, viewing the
evidence in the light most favorable to the nonmoving party and
drawing all reasonable inferences in favor of that party (Weiss v.
People ex rel. Department of Transportation (2020) 9 Cal.5th 840,
864; Regents of University of California v. Superior Court (2018)
4 Cal.5th 607, 618), decide independently whether the facts not
subject to triable dispute warrant judgment for the moving party
as a matter of law. (Hampton v. County of San Diego (2015)
62 Cal.4th 340, 347; Schachter v. Citigroup, Inc. (2009) 47 Cal.4th
610, 618.)
       When a defendant moves for summary judgment in a
situation in which the plaintiff would have the burden of proof at
trial by a preponderance of the evidence, the defendant may, but
need not, present evidence that conclusively negates an element
of the plaintiff’s cause of action. Alternatively, the defendant
may present evidence to “‘show[] that one or more elements of the
cause of action . . . cannot be established’ by the plaintiff.”
(Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 853
(Aguilar); accord, Regents of University of California v. Superior
Court, supra, 4 Cal.5th at p. 618 [“[a] defendant seeking
summary judgment must show that the plaintiff cannot establish
at least one element of the cause of action”]; Code Civ. Proc.,
§ 437c, subd. (p)(2).) “The moving party bears the burden of
showing the court that the plaintiff has not established, and
cannot reasonably expect to establish, the elements of his or her
cause of action.” (Ennabe v. Manosa (2014) 58 Cal.4th 697, 705,
internal quotation marks omitted; accord, Wilson v. 21st Century
Ins. Co. (2007) 42 Cal.4th 713, 720; see Kahn v. East Side Union
High School Dist. (2003) 31 Cal.4th 990, 1002-1003 [“the

                                15
defendant must present evidence that would preclude a
reasonable trier of fact from finding that it was more likely than
not that the material fact was true [citation], or the defendant
must establish that an element of the claim cannot be
established, by presenting evidence that the plaintiff ‘does not
possess and cannot reasonably obtain, needed evidence’”].)
       Once the defendant’s initial burden has been carried, the
burden shifts to the plaintiff to demonstrate, by reference to
specific facts, not just allegations in the pleadings, there is a
triable issue of material fact as to the cause of action. (Code Civ.
Proc., § 437c, subd. (p)(2); Aguilar, supra, 25 Cal.4th at p. 850.)
“There is a triable issue of material fact if, and only if, the
evidence would allow a reasonable trier of fact to find the
underlying fact in favor of the party opposing the motion in
accordance with the applicable standard of proof” at trial.
(Aguilar, at p. 850; accord, Lugtu v. California Highway Patrol
(2001) 26 Cal.4th 703, 722.)
      2. Governing Law
        A cause of action for malicious prosecution consists of
three primary elements. “The underlying action must have been:
(i) initiated or maintained by, or at the direction of, the
defendant, and pursued to a legal termination in favor of the
malicious prosecution plaintiff; (ii) initiated or maintained
without probable cause; and (iii) initiated or maintained with
malice.” (Parrish v. Latham & Watkins (2017) 3 Cal.5th 767,
775; accord, Crowley v. Katleman (1994) 8 Cal.4th 666, 676.) The
plaintiff must also prove “resulting damage.” (Drummond v.
Desmarais (2009) 176 Cal.App.4th 439, 449; accord, Sierra Club
v. Superior Court (1985) 168 Cal.App.3d 1138, 1144; see also
CACI No. 1501 [to establish a claim for wrongful use of civil

                                 16
proceedings, plaintiff must prove, among other elements, that
plaintiff was harmed and defendant’s conduct was a substantial
factor in causing plaintiff’s harm].)
       “[T]he measure of compensatory damages for the malicious
prosecution of a civil action includes attorney fees and court costs
for defending the prior action and compensation for emotional
distress, mental suffering and impairment to reputation
proximately caused by the initiation and prosecution of the
action.” (Bertero v. National General Corp. (1974) 13 Cal.3d 43,
59; see Jackson v. Yarbray (2009) 179 Cal.App.4th 75, 90 [“[a]
malicious prosecution action provides a remedy for a party that
has ‘suffered out of pocket loss in the form of attorney fees and
costs, as well as emotional distress and injury to
reputation because of groundless allegations made in pleadings
which are public records’”].)
      3. LPB Failed To Present Admissible Evidence That Belco’s
         Pursuit of Its Cross-complaint Caused Any Future Lost
         Profits
      LPB has steadfastly maintained that Belco’s refusal to
meet its payment obligations after acquiring LPB’s assets—
Belco’s breach of contract—led to LPB’s inability to restart the
business with a reduced workforce and a more focused effort to
target major subcontracts for transportation electrical work,
including its failure to reinstate its suspended contractor’s
license, resulting in millions of dollars in lost profits.8 Belco first

8      LPB could have but did not seek to recover its claimed lost
profits in its breach of contract action. (See Sargon Enterprises,
Inc. v. University of Southern California (2012) 55 Cal.4th 747,
773 [“[l]ost profits may be recoverable as damages for breach of a
contract”].)

                                  17
missed a payment in September 2013 and finally paid the full
amount due on the contracts in August 2016. LPB contends this
three-year delay in payment was due to Belco’s litigation of the
cross-complaint, yet presented no admissible evidence that
supports its position.
       As discussed, in their moving papers Belco and Devito
presented evidence LPB’s lost profits, if any, were caused by
Belco’s failure to make required payments on the parties’
contracts and suspension of LPB’s contractor’s license, not
litigation of the cross-complaint, and LPB’s claim for lost profits
was, in any event, unduly speculative, thereby shifting to LPB
the burden of establishing the existence of triable issues of
material fact precluding summary judgment. As Belco and
Devito emphasized, the cross-complaint was not filed until
December 2014, 15 months after the original breach of contract.
Plainly, then, filing and prosecuting the cross-complaint had no
causal relationship to any damages purportedly incurred during
that period.
       As for the remaining period between December 2014 and
August 2016, LPB insists the delay in payment, and LPB’s
consequent inability to reinstate its contractor’s license and bid
on new subcontracts, was due in substantial part to Belco’s
maintenance of the cross-complaint, not simply to Belco’s denial
of liability in the contract action. (To reiterate, Belco’s answer
not only denied liability but also asserted as an affirmative
defense that it had a right to offsets that would bar or reduce any
amounts that might be due).9 Whatever the logic of LPB’s

9     Reinforcing the position asserted in an affirmative defense
by pursuing a cross-complaint with malice and without probable
cause is generally actionable, allowing the plaintiff and cross-

                                18
contention that payment was delayed because of the cross-
complaint, not Belco’s denial of liability—after all, Belco
continued to litigate its cross-complaint for more than a year
after it paid LPB the full amount allegedly due, plus prejudgment
interest—the only evidence LPB attempted to introduce to
support its theory—statements made to LPB’s counsel at a
mediation and Belco’s mediation brief—was properly excluded by
the trial court.10
       LPB argues the trial court erred in sustaining the
objections to this evidence, citing HMS Capital, Inc. v. Lawyers
Title Co. (2004) 118 Cal.App.4th 204, which held settlement
discussions concerning the underlying litigation are admissible in
a malicious prosecution suit as evidence of improper purpose.
(Id. at p. 219.) Because the discussions at issue in that case did
not take place during a mediation, however, our colleagues in

defendant to recover attorney fees incurred to defend against the
cross-complaint and any damages for harm to reputation and
emotional distress that are proved. (See Bertero v. National
General Corp., supra, 13 Cal.3d at p. 53 [“By seeking affirmative
relief . . . , defendants in the instant case did more than attempt
to repel [plaintiff]’s attack; they took the offensive in attempting
to prosecute a cause of action of their own. When such action is
prompted by malice and is not based on probable cause, it is
actionable as in the case of other affirmative, malicious
prosecutions”].) Here, as discussed, LPB is not seeking its
attorney fees, which have already been paid, and it failed to prove
injury to its reputation.
10    Objections to the evidence were based on both the
mediation privilege and the limited privilege for offers of
compromise. The court sustained the objections without
indicating the grounds for its ruling.

                                 19
Division Three of this court in HMS Capital discussed only
Evidence Code sections 1152 and 1154, statutes prohibiting use
of settlement negotiations to show liability or invalidity of a
claim, not the mediation privilege of Evidence Code
section 1115 et seq. (HMS Capital, at p. 1219.) Here, in contrast,
it is undisputed the settlement offer referring to the cross-
complaint reported by LPB’s counsel was made during a
mediation and Belco’s brief was submitted in the course of the
mediation—material unquestionably privileged and inadmissible
in LPB’s malicious prosecution action. (See generally Cassel v.
Superior Court (2011) 51 Cal.4th 113, 127 [“[T]he Legislature
intended the unambiguous provisions of the mediation
confidentiality statutes to be applied broadly [citation], that
exceptions are limited to narrowly prescribed statutory
exemptions, and that ‘[e]xcept in cases of express waiver or where
due process is implicated’ [citations], mediation confidentiality
must be strictly enforced, even where competing policy
considerations are present”]; id. at p. 132 [“[t]he mediation
confidentiality statutes govern only the narrow category of
mediation-related communications, but they apply broadly within
that category, and are designed to provide maximum protection
for the privacy of communications in the mediation context”].)
       Given LPB’s acknowledgement it was Belco’s failure to pay
sums due under the 2013 contracts that caused its loss of future
profits (if any), in the absence of admissible evidence that Belco’s
filing and continued prosecution of a cross-complaint seeking
affirmative relief aggravated LPB’s dire financial situation, the
trial court correctly concluded LPB had failed to establish a
disputed issue of material fact as to this aspect of its malicious
prosecution claim.

                                20
      4. LPB Failed To Present Admissible Evidence That Future
         Lost Profits Were Certain
      The trial court’s alternate, related ruling that LPB failed to
present evidence establishing the fact of lost future profits with
the requisite degree of certainty was also correct.
      The Supreme Court in Sargon Enterprises, Inc. v.
University of Southern California (2012) 55 Cal.4th 747
summarized the principles governing a claim of lost future profits
as a measure of damages: “‘[T]he general principle [is] that
damages for the loss of prospective profits are recoverable where
the evidence makes reasonably certain their occurrence and
extent.’ [Citation.] Such damages must ‘be proven to be certain
both as to their occurrence and their extent, albeit not with
“mathematical precision.”’ . . . [¶] Regarding lost business
profits, the cases have generally distinguished between
established and unestablished businesses. ‘[W]here the operation
of an established business is prevented or interrupted, as by a . . .
breach of contract . . . , damages for the loss of prospective profits
that otherwise might have been made from its operation are
generally recoverable for the reason that their occurrence and
extent may be ascertained with reasonable certainty from the
past volume of business and other provable data relevant to the
probable future sales.’ . . . [¶] ‘On the other hand, where the
operation of an unestablished business is prevented or
interrupted, damages for prospective profits that might otherwise
have been made from its operation are not recoverable for the
reason that their occurrence is uncertain, contingent and
speculative. [Citations.] . . . But although generally
objectionable for the reason that their estimation is conjectural
and speculative, anticipated profits dependent upon future events

                                 21
are allowed where their nature and occurrence can be shown by
evidence of reasonable reliability.’ [Citation.] [¶] ‘Where the fact
of damages is certain, the amount of damages need not be
calculated with absolute certainty.’” (Id. at pp. 773-775.)
       At the relevant time LPB was effectively a new business,
subject to the heightened requirement for showing the fact of lost
profits by evidence of reasonable reliability. As of mid-September
2013 when Belco first breached its contract with LPB, LPB had
no hard assets (that is, no equipment, no tools, no vehicles and no
warehouse), no employees other than Chan and no work in
process or commitments for future work. Its contractor’s license
had been suspended, and it had lost its MBE/DBE designation.
It did have some remaining capital—LPB’s accounts receivables,
which were not transferred to Belco, and the anticipated
payments from Belco—as well as residual goodwill. With that,
Chan testified, he planned to restart a scaled-down version of the
company.11
       Mid-September 2013, however, is not the pertinent time for
establishing a claim for lost profits in the malicious prosecution
action, rather than LPB’s original breach of contract lawsuit. As
of December 2014 when the cross-complaint was filed, the
difficulties confronting LPB had only increased. It remained a
shell company with no hard assets, no employees, no contractor’s
license and no MBE/DBE designation. Although Pena, a former
employee, told Chan in 2013 he was willing to rejoin LPB if it
was able to financially restructure, there is no evidence in the
record that Pena or any other former management or line

11    LPB’s agreements with Belco did not include a noncompete
provision.

                                 22
employee would have been willing to do so 15 months later.
Similarly, there is no evidence concerning any remaining capital
(accounts receivable) available to LPB in December 2014, nor is
there any evidence as to the significance or value, if any, of LPB’s
goodwill more than a year after it ceased doing any business.
      Against this backdrop LPB’s historic record—the
sometimes positive cash flow it generated between 2005 and
2012—is not probative of what an entirely restructured, scaled-
down company might have been able to accomplish beginning in
December 2014; and its evidence, even if admissible, that at some
point between 2013 and 2016—a four-year time span that
includes two years before Belco’s cross-complaint was filed12—
Engler said LPB’s participation in the Crenshaw/LAX project
would be welcome falls far short of creating a triable issue of fact
that future profits were relatively certain but for Belco’s
malicious pursuit of its cross-complaint. As the trial court
observed, welcoming a proposal from a company does not assure
the subcontract will be awarded to it; and, as Chan admitted,
when LPB performed a contract, earning a profit was not
guaranteed.

12    Although Chan’s declaration does not state when the
conversation with Engler occurred, read in context Chan suggests
it was in 2013 while Chan was still anticipating payments from
Belco would continue. Engler was similarly vague. He stated he
was business manager of the joint venture building the
Crenshaw/LAX project between 2013 and 2016 and had the
conversation with Chan “in this time frame.” Engler, who
presumably would know, did not include in his declaration the
date construction on the project began or when the subcontract
he referred to was let.

                                 23
      5. LPB Failed To Present Admissible Evidence That Its
         Reputation Was Injured
       Effectively conceding it presented no admissible evidence of
actual injury to its reputation as a result of Belco’s filing and
prosecution of the cross-complaint,13 in its response to Belco and
Devito’s separate statement of undisputed facts (but not its
memorandum in opposition to the motion), LPB asserted that
falsely accusing a company of fraud is defamation per se. As
such, LPB argues in its briefing in this court, general damages
are presumed, no proof is required, and the trial court erred in
summarily deciding the reputational injury claim as a matter of
law.
       LPB is certainly correct that a false and unprivileged
written statement, defamatory on its face—that is, without the
necessity of explanatory matter—is actionable without proof the
plaintiff has suffered special damages as a proximate result of
the statement’s publication. (Civ. Code, §§ 44, 45a; see Finney v.
Lockhart (1950) 35 Cal.2d 161, 163 [in an action for damages for
defamation per se, “the law presumes general damages”]; Tilkey
v. Allstate Ins. Co. (2020) 56 Cal.App.5th 521, 542 [“[i]n an action
for defamation per se, the meaning is so clear from the face of the
statement that the damages can be presumed”].) A jury may

13    LPB on appeal does not challenge the trial court’s ruling
sustaining the objection to the portion of Chan’s declaration
stating he heard from an unspecified source that Walter’s Electric
Wholesale had been telling people about LPB’s fraudulent
dealings with Belco and asserting Belco had to be the source of
those comments. As discussed, with their moving papers Belco
and Devito included Chan’s deposition testimony providing
essentially the same information and nothing else to support the
claim of reputation injury.

                                 24
award as compensation for the assumed harm whatever sum it
believes is reasonable. (See CACI No. 1704.)
       LPB did not plead a cause of action for defamation,
however, and for good reason. The only admissible evidence of
Belco’s statements accusing LPB of fraud or dishonesty was
contained in its cross-complaint in the underlying litigation. As
LPB necessarily acknowledges, those allegations would be fully
protected by Civil Code section 47, subdivision (b)’s absolute
litigation privilege in a defamation action. (See Rusheen v. Cohen
(2006) 37 Cal.4th 1048, 1057; Silberg v. Anderson (1990)
50 Cal.3d 205, 215-216; Weeden v. Hoffman (2021) 70 Cal.App.5th
269, 289-290.)
       While it is also correct that LPB’s lawsuit for malicious
prosecution falls within the lone tort claim exception to the
litigation privilege (see, e.g., Flatley v. Mauro (2006) 39 Cal.4th
299, 322 [the litigation privilege “is ‘an “absolute” privilege, and
it bars all tort causes of action except a claim of malicious
prosecution’”]; Rusheen v. Cohen, supra, 37 Cal.4th at p. 1057
[the litigation privilege is applicable to “‘all torts except malicious
prosecution’”]), as discussed, one of the essential elements of a
cause of action for malicious prosecution is proof of resulting
damage. (E.g., Drummon v. Desmarais, supra, 176 Cal.App.4th
at p. 449.) LPB cites no authority, and we are aware of none, nor
does it offer any policy rationale to support its attempt to export
the notion of presumed damages to a lawsuit for malicious
prosecution, a cause of action that has traditionally been
described as “disfavored.” (See, e.g., Siebel v. Mittlesteadt (2007)
41 Cal.4th 735, 740; Dorit v. Noe (2020) 49 Cal.App.5th 458, 472.)
       To be sure, the harm inflicted by the pursuit of groundless
litigation, motivated by malice, justifies excepting a malicious

                                  25
prosecution action from the scope of the protection afforded by
Civil Code section 47, subdivision (b). (See generally Crowley v.
Katleman, supra, 8 Cal.4th at p. 695 [“when the litigation is
groundless and motivated by malice the balance tips in favor of
the policy of redressing the individual harm inflicted by that
litigation”].) But courts have “carefully circumscribed” the
elements of the tort, “so that litigants with potentially valid
claims will not be deterred from bringing their claims to court.”
(Sheldon Appel Co. v. Albert & Oliker (1989) 47 Cal.3d 863, 872;
accord, Dorit v. Noe, supra, 49 Cal.App.5th at p. 472.) LPB’s
proposed expansion of a malicious prosecution action to allow for
recovery of presumed damages based on the inclusion of
defamatory allegations in the pleading initiating an underlying
action—damages not recoverable in a defamation suit—would
constitute just such an unwarranted expansion of the tort.
       In sum, because LPB made no claim for attorney fees and
costs as damages and failed to present admissible evidence that
Belco’s filing and prosecution of its cross-complaint was
responsible for any lost future profits or caused actual injury to
its reputation, the trial court properly granted Belco and Devito’s
motion for summary judgment.
                         DISPOSITION
       The judgment is affirmed. Belco and Devito are to recover
their costs on appeal.

                                     PERLUSS, P. J.

      We concur:

            SEGAL, J.                FEUER, J.

                                26