Mulder v. Pilot Air Freight

Filed 11/29/05 Mulder v. Pilot Air Freight CA2/4

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or ordered published for purposes of rule 977.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION FOUR

ROBERT P. MULDER, Plaintiff and Respondent v. PILOT AIR FREIGHT et al., Defendants and Appellants.

B178864 (Los Angeles County Super. Ct. No. BC212980)

APPEAL from an order of the Superior Court of Los Angeles County,

Alexander H. Williams III, Judge. Affirmed.

Bragg & Kuluva and Sydnee R. Singer for Defendants and Appellants.

Ezra, Brutzkus, Gubner, Robert Ezra and G. Michael Jackson for Plaintiff and Respondent.

This appeal is from denial of a special motion to strike a malicious prosecution suit pursuant to Code of Civil Procedure section 425.16,^[1] the anti-SLAPP statute.[2] We agree with the trial court’s conclusion that the plaintiff in the underlying action demonstrated a probability of success on the merits of the suit, and therefore affirm the trial court’s denial of the motion.

FACTUAL AND PROCEDURAL SUMMARY

The following facts taken from the record are largely undisputed. The underlying action stems from the sale of a flight recorder to Robert P. Mulder. In 1997, Erick Moe, a salvage buyer, bought several palettes loaded with boxes of salvage from Pilot Air Freight (Pilot) through Huy Nguyen, its district manager. In 1998, Moe arranged to bring part of the salvage to Mulder’s warehouse. They agreed that Mulder would sell the salvage for commission. When Mulder sorted through the salvage delivered by Moe, he discovered a flight recorder with Patlon Aircraft markings, together with a bill of lading with Patlon’s telephone number. Mulder contacted Patlon and was told that the recorder had been lost a year before. Patlon expressed interest in getting the recorder back and told Mulder to contact Pilot and “Sameday Right O Way,” which had shipped the parts to Pilot. Mulder contacted Pilot, which expressed no interest in the recorder. He passed this information on to Patlon.

In early August 1998, Mulder was contacted by defendant Covert, an employee of Pilot who identified himself as such. Covert asked Mulder how much he wanted for the recorder. Mulder asked for $5,000; Covert said Pilot would pay $500. Negotiations continued between Mulder and Covert over the next several months.

In October 1998, Pilot, through Covert, filed a report with the Los Angeles Police Department, stating that the flight recorder was stolen and in Mulder’s possession. There is a dispute whether Covert told police that Pilot had sold the recorder through Nguyen to Moe. Mulder was not told about the stolen property report. In January 1999, as part of a police-directed sting operation, Covert again offered to buy the flight recorder and Mulder agreed to a price of $1,000. Two undercover Los Angeles Police Officers, Marco Morales and Dana Adams, entered Mulder’s offices on January 6, 1999. They handed him a check for $1,000 (payable to Robert Evans, the name Covert claims Mulder used in his dealings with Pilot), then left. They returned with eight other officers, handcuffed Mulder, and searched him in front of employees and a customer. He was arrested for receiving stolen property.

Criminal charges were filed against Mulder. Later they were dismissed. Mulder then sued Pilot and Covert for false imprisonment and intentional infliction of emotional distress, alleging the Pilot defendants made their report to police in bad faith and with malice. The trial court granted judgment on the pleadings, relying on the privilege established by Civil Code section 47, subdivision (b). In an earlier decision, we agreed that Civil Code section 47, subdivision (b) operated as a bar to the claims of false imprisonment and intentional infliction of emotional distress, but we ordered the trial court to grant Mulder leave to amend the complaint as to malicious prosecution. The Supreme Court affirmed this decision in Mulder v. Pilot Air Freight (2004) 32 Cal.4th 384.

Subsequently, Mulder filed an amended complaint to claim malicious prosecution. He alleged that Covert, for Pilot, filed a report with the Los Angeles Police Department claiming the flight recorder was stolen, and that this was done with malice and bad faith as demonstrated by his failure to inform police that Mulder acquired the recorder legitimately. The complaint also asserts that the Pilot defendants maliciously instigated and participated in Mulder’s unlawful arrest and imprisonment and acted without probable cause in initiating the prosecution in order to recover the flight recorder without having to pay its full market value or inform its customer, Patlon, that it had been lost.

In response to the complaint, Pilot and Covert brought a special motion to strike pursuant to section 425.16, arguing that malicious prosecution falls within the provisions of that statute and that Mulder could not prove essential elements of a prima facie case for that tort. Mulder opposed the motion, arguing that he met his burden of establishing a probability of prevailing in the action, in that Pilot and Covert had no probable cause to initiate the criminal proceedings against him. The court denied the motion, and Pilot and Covert filed this timely appeal.

DISCUSSION

I

The anti-SLAPP statute provides in relevant part: “A cause of action against a person arising from any act of that person in furtherance of the person’s right of petition or free speech under the United States or California Constitution in connection with a public issue shall be subject to a special motion to strike, unless the court determines that the plaintiff has established that there is a probability that the plaintiff will prevail on the claim.” (§ 425.16, subd. (b)(1).)

We review, de novo, an order granting or denying a special motion to strike pursuant to section 425.16. (Drum v. Bleau, Fox & Associates (2003) 107 Cal.App.4th 1009.) This independent review applies to both steps of the analysis under section 425.16: whether “a complaint arises out of the defendant’s exercise of a valid right to free speech and petition” and, if it does, whether the plaintiff established a “reasonable probability of prevailing on the complaint.” (Id. at p. 1017.)

On the threshold issue, there is no dispute that a malicious prosecution suit falls within the ambit of the anti-SLAPP statute. (Jarrow Formulas, Inc. v. LaMarche (2003) 31 Cal.4th 728, 734-735.) We turn to the next step in the analysis.

II

For this step, the burden shifted to Mulder to demonstrate a probability of success on the merits of his malicious prosecution claim. (§ 425.16, subd. (b)(1).) In denying the anti-SLAPP motion, the trial court held that Mulder met this burden.

In deciding whether to grant a special motion to strike under section 425.16, the court “shall consider the pleadings, and supporting and opposing affidavits stating the facts upon which the liability or defense is based.” (§ 425.16, subd. (b)(2).) To establish a probability of succeeding on the merits, a 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.’” [Citation.]” (Navellier v. Sletten (2002) 29 Cal.4th 82, 88-89.) A ruling on a special motion to strike under section 425.16 “operate[s] ‘like a demurrer or motion for summary judgment in “reverse.”’” (Briggs v. Eden Council for Hope & Opportunity (1999) 19 Cal.4th 1106, 1123, quoting College Hospital, Inc. v. Superior Court (1994) 8 Cal.4th 704, 718-719.) The plaintiff’s burden of demonstrating a probability of prevailing is subject to a standard similar to that used in deciding a motion for nonsuit. (Siam v. Kizilbash (2005) 130 Cal.App.4th 1563, 1570.) A nonsuit may be granted when, disregarding conflicting evidence, giving the plaintiff’s evidence all the value to which it is legally entitled, and indulging every legitimate inference which may be drawn from the evidence in plaintiff’s favor, the evidence is insufficient to support a jury verdict in his or her favor. (Castaneda v. Olsher (2005) 132 Cal.App.4th 627, 635-636.)

To succeed in a malicious prosecution claim, a plaintiff must prove that the prior action was (1) begun at the direction of the defendant, (2) pursued to a legal termination in the plaintiff’s favor, (3) brought without probable cause, (4) initiated with malice, and (5) resulted in damages to the plaintiff. (Sierra Club v. Superior Court (1985) 168 Cal.App.3d 1138, 1144.) We focus on evidence as to whether the underlying action terminated in Mulder’s favor, whether Pilot had probable cause to file a stolen property report with the police, and whether Pilot initiated the criminal action with malice.

A

To constitute a favorable termination, the lawsuit must result in a conclusion “reflective of the merits of the action and of the plaintiff’s innocence of the misconduct alleged therein.” (Villa v. Cole (1992) 4 Cal.App.4th 1327, 1335.) Thus, a dismissal resulting from negotiation, settlement, or agreement is generally not a favorable termination, while a voluntary unilateral dismissal or failure to prosecute generally is sufficient to satisfy the standard. (See Eells v. Rosenblum (1995) 36 Cal.App.4th 1848, 1854-1856.)

Mulder contends, and Pilot and Covert acknowledge, that the case was dismissed for lack of evidence.[3] Pilot and Covert assert that the dismissal was not based on Mulder’s innocence but on what they characterize as purely “procedural” grounds caused by the prosecution’s inability to obtain necessary evidence from the owner of the flight recorder. In a declaration given in this case, Robert Ferber, the prosecuting attorney, stated that “[t]he sole reason for the dismissal of the criminal case was not because the case had no merit, but rather that it was impossible to obtain either voluntary appearance or jurisdiction to compel the appearance of the critical witness . . . the owner of the flight recorder. Without the testimony of this witness, it was my judgment that there was no likelihood of conviction, notwithstanding the fact that the facts set forth in the arrest report, which I believed could have been proven in court with the availability of the witness who would have provided the evidence needed to support a conviction of the defendant.”

We disagree with the “procedural technicality” characterization. The dismissal was based on a failure of proof, not on a procedural or technical ground raising no inference as to the merits of the claim. (Compare Robbins v. Blecher (1997) 52 Cal.App.4th 886, 893-894 [voluntary dismissal of alter ego action against plaintiff on grounds of mootness did not constitute favorable termination]; Eells v. Rosenblum, supra, 36 Cal.App.4th at pp. 1854-1855 [dismissal based on prematurity considered technical defect and no reflection on merits]; Koch v. Rodlin Enterprises (1990) 223 Cal.App.3d 1591, 1596 [termination of action by statute of limitations deemed technical, not substantive termination]; Hudis v. Crawford (2005) 125 Cal.App.4th 1586, 1592 [dismissal for lack of jurisdiction does not involve merits of case].) It was, instead, based on lack of evidence.

Dismissal for lack of evidence is a favorable termination for the defendant. (See Casa Herrera, Inc. v. Beydoun (2004) 32 Cal.4th 336, 342-343 [dismissal based on parol evidence rule, a substantive rule of law rather than procedural bar to evidence, was substantive termination on merits constituting favorable termination]; Berman v. RCA Auto Corp. (1986) 177 Cal.App.3d 321 [dismissal based on absolute privilege is favorable termination on the merits]; Mattel, Inc. v. Luce, Forward, Hamilton & Scripps (2002) 99 Cal.App.4th 1179, 1191 [grant of summary judgment on underlying action constitutes favorable termination].) Accordingly, we conclude that for purposes of the special motion to dismiss, the “favorable termination” element was satisfied.

B

Whether Pilot had probable cause to file the police report depends upon whether a reasonable litigant or “any reasonable attorney would have thought the claim tenable” based on what he or she knew when the claim was initiated. (Sheldon Appel Co. v. Albert & Oliker (1989) 47 Cal.3d 863, 878, 886; Wilson v. Parker, Covert & Chidester (2002) 28 Cal.4th 811, 817 (Wilson).) The important inquiries are the state of defendant’s knowledge and whether the facts in his or her possession would have caused a reasonable person or reasonable attorney in that situation to believe that the claim was tenable. (See Hufstedler, Kaus & Ettinger v. Superior Court (1996) 42 Cal.App.4th 55, 66 citing Sheldon Appel Co. v. Albert & Oliker, supra, 47 Cal.3d at pp. 885-886; accord Wilson, supra, 28 Cal.4th at p. 817.)

Here, Mulder presented evidence that: (1) Covert never stated to Mulder that the flight recorder was missing, stolen, or had been removed under any suspicious circumstances; (2) he had information indicating that Mulder legitimately acquired the flight recorder from Moe, who had purchased it as salvage from Pilot through Nguyen, then the district manager for Pilot; (3) Covert failed to communicate this exculpatory evidence to the police; (4) he also failed to contact Nguyen or Moe to confirm Mulder’s explanation of the acquisition; (5) he waited two months after learning the location of the flight recorder to contact the police; and (6) he was in receipt of communication from Patlon seeking return of the flight recorder. Based on these facts, the trial court implicitly found that a prima facie showing had been made that Covert lacked probable cause to believe the recorder was stolen. Stated another way, the trial court concluded that this evidence was enough for the malicious prosecution action to survive a motion for nonsuit.

Pilot and Covert assert that Mulder established only that Covert had doubts whether the flight recorder had been stolen, not that Covert knew or believed the recorder had been lawfully purchased. In his deposition, Covert stated that he was not certain whether the recorder was stolen when he contacted the police, and that he informed police of his uncertainty. He also stated he did not know whether the flight recorder was stolen after “talking with the supervisors and the dock people and the other people.” During their negotiations over two months, Covert never told Mulder the flight recorder was stolen, or that he thought it was missing or had been removed from Pilot under suspicious circumstances. While acknowledging that he did not use the word “stolen” to describe the status of the flight recorder to Mulder, Covert stated that he “clearly allude[d] to the fact that there is something wrong here as to why the goods are in someone else’s possession.” Covert asserts that he told Mulder the flight recorder was stolen in a taped conversation as part of the sting operation. But Mulder’s refusal to return the flight recorder after this conversation does not demonstrate guilt. If Mulder believed he had acquired the recorder legitimately, he had no reason to stop negotiations and hand over the flight recorder.

In deposition, Nguyen testified that he had permission from John Petry, Pilot’s acting owner, to clean up the warehouse as part of his duties as district manager. To this end, he offered to sell the unwanted materials to Moe, the salvage dealer. Around October 1997, Moe went to Pilot’s warehouse and inspected the salvage. Moe noticed a metal suitcase, identified as a “flight data recorder” when he loaded the salvage onto his truck. Moe disposed of most of the goods and brought a few items, including the flight recorder, to the office he shared with Mulder. Moe and Mulder made an arrangement whereby Mulder would attempt to sell the flight recorder on Moe’s behalf. In deposition, Covert testified that Mulder told him that he acquired the flight recorder through a business associate who handled salvage freight, and that Mulder named Huy Nguyen. Indeed, Covert admitted that he believed Mulder had been contacted by Moe to sell goods salvaged from Pilot.

Officer Adams testified that neither Covert nor anyone else at Pilot gave him any information suggesting that Mulder had obtained the recorder legitimately. Adams stated that at their first meeting he received information from Covert that the recorder was missing and probably stolen. In several documents Covert also stated the device was stolen. Covert wrote a memorandum to Detective William Fallon, an officer assigned to the case, describing the flight recorder as “stolen from the Pilot Air Freight dock in Los Angeles.” Covert wrote another memorandum to Pilot’s vice-president of transportation advising him he would be filing a police report for “stolen property as the shipment was taken from the LAX facility in an unknown manner.” This evidence, if credited, is sufficient to establish that Covert communicated to police that the flight recorder had been stolen, but withheld information known to him that it was sold as salvage by a Pilot employee.

Covert claimed he told police about the role of Nguyen and Moe. But Officer Adams testified that he did not. Instead, Covert told him that the only investigation undertaken before contacting police revealed that the freight was shipped from Patlon, was received in Pilot’s warehouse, but never arrived at the consignee. Adams did not mention either Moe or Nguyen in his declaration, and in fact acknowledged that he would not have pursued criminal charges against anyone if he had known the recorder was sold legitimately through Nguyen to Moe.

Although Nguyen was a former Pilot employee, Covert made no effort to contact him or Moe to confirm Mulder’s explanation of the acquisition. In his declaration, Officer Adams stated specifically that he did not obtain any information about Nguyen from Covert, and only learned of Nguyen from Moe at some later point in the investigation. When he requested Nguyen’s contact information from Covert and another Pilot employee, he was told that Nguyen had been fired or terminated from Pilot and that the company did not have or could not obtain this information. In response, Mulder points to Nguyen’s testimony that he lived in the same apartment complex as John Petry, a Pilot employee, and in fact saw Petry occasionally.

Covert learned Mulder was in possession of the missing flight recorder in August 1998, when Mulder contacted Patlon and Pilot with an offer to sell the device. But Covert waited until October 1998, two months later, to contact the police. During this time, Patlon pressured Pilot to “take steps to recover the valuable shipment.”

When negotiations to purchase the flight recorder from Mulder failed, Covert filed a stolen property report with the LAPD. He ignored Mulder’s explanation of his acquisition of the flight recorder and took no action, either personally or through the police, to verify Mulder’s claim that he was a bona fide purchaser, and withheld that information from the police. This evidence, if credited, supports the inference that neither Pilot nor Covert had probable cause to believe that Mulder had committed a crime.

C

Pilot and Covert also assert that police independently decided to investigate Mulder, conducted a sting operation, and ultimately arrested him for possession of stolen property. They argue LAPD’s decisions and actions constitute an independent cause for the arrest and prosecution of Mulder, relieving them of liability for malicious prosecution.

Although police and the prosecution reached their own decisions about prosecuting Mulder, the decisions were made without the benefit of significant information withheld by Covert. The information about Nguyen and Moe is evidence of Mulder’s innocence. Officer Adams acknowledged that if he had had evidence that it was a legitimate transaction, he would not have pursued a criminal case against Mulder or anyone else. In the police report, Adams states that he interviewed Moe on January 7, 1999, the day after Mulder was arrested. Adams learned about Moe from Mulder, after this arrest. He learned about Nguyen through Moe. Adams stated that he asked Covert about Nguyen the next day, and was told that Nguyen did not have permission or authorization to sell or give away the flight recorder. Covert did not give Adams any contact information for Nguyen. Although Adams did not have this information when he decided to conduct the sting operation, the police and prosecution were aware of Moe and Nguyen’s role when they made the decision to charge Mulder later that month.

In light of the nonsuit standard requiring that the trial court (and this court) indulge every legitimate inference in favor of the plaintiff and disregard conflicting evidence, we conclude there is sufficient evidence of causation to support a jury verdict in Mulder’s favor. (See Siam v. Kizilbash, supra, 130 Cal.App.4th at p. 1570.)

D

Finally, we consider the element of malice. “‘The malice element of the malicious prosecution tort goes to the defendant’s subjective intent . . . . It is not limited to actual hostility or ill will toward the plaintiff.’ [Citation.] It can exist, for example, where the proceedings are initiated for the purpose of forcing a settlement which has no relation to the merits of the claim. A lack of probable cause is a factor that may be considered in determining if the claim was prosecuted with malice [citation], but the lack of probable cause must be supplemented by other, additional evidence. [Citation.] Since parties rarely admit an improper motive, malice is usually proven by circumstantial evidence and inferences drawn from the evidence.” (HMS Capital, Inc. v. Lawyers Title Co. (2004) 118 Cal.App.4th 204, 218.)

According to Officer Adams, Covert never discussed the possibility that Mulder had acquired the flight recorder legitimately. According to his own deposition and declaration, neither did Covert attempt to contact Nguyen or Moe to confirm or disprove Mulder’s claims. It was undisputed that Patlon, the owner of the flight recorder, pressured Pilot to get it back. These facts support the inference Pilot and Covert filed a police report alleging that Mulder was in possession of stolen goods in order to recover the device even though they did not know whether the recorder had in fact been stolen and made no attempt to find out. While Covert offers a different version of his discussion with Officer Adams, if a trier of fact were to accept Adams’ version, it would support a finding of malice.

Based on this evidence, Mulder established a probability of success on his malicious prosecution claim. Thus, the motion to strike was properly denied as Mulder met his burden of establishing the existence of a prima facie case for malicious prosecution.

DISPOSITION

The order of the court denying the motion to strike is affirmed. Respondent is to have his costs on appeal.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS.

EPSTEIN, P. J.

We concur:

HASTINGS, J.

WILLHITE, J.

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[1] All statutory references are to the Code of Civil Procedure.

[2] SLAPP is an acronym for Strategic Lawsuits Against Public Participation. (See Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 57.)

[3] In their briefs, the parties allude to a plea bargain. In his declaration in support of his opposition to the motion to strike, Mulder states that he was offered and refused a plea bargain before his case was dismissed. Pilot and Covert’s objections to this evidence about the plea bargain and dismissal were sustained.