Tuesday, April 20, 2004
Supreme Court Rules:
Continuing Unjustified Suit Can Constitute Malicious Prosecution
By KENNETH OFGANG, Staff Writer/Appellate Courts
A lawyer who files suit in good faith has a duty to dismiss it if he or she subsequently learns that it is not supported by probable cause, and faces malicious prosecution liability for not doing so, the California Supreme Court ruled yesterday.
Resolving a split among Court of Appeal panels, the state high court ruled unanimously that Woodland Hills attorneys Jerome Zamos and Odion L. Okojie may continue their suit against Van Nuys lawyer James T. Stroud.
Los Angeles Superior Court Judge Stephen D. Petersen had ordered the suit stricken as a strategic lawsuit against public participation, but this district’s Div. Five reversed in July of last year.
Zamos and Okojie, practicing as the Law Offices of Jerome Zamos, sued over Stroud’s handling of a suit charging them with fraud. The plaintiff in that action was Patricia Brookes, a defendant in the malicious prosecution suit but not a party to the appeal.
The Zamos firm’s ex-client, Brookes, claimed that Zamos lied to her when he persuaded her to settle a wrongful foreclosure suit for $250,000, payable by some of the defendants.
In the suit filed by Stroud, Brookes alleged that Zamos promised to continue representing her against the remaining defendants, to represent her in a malpractice suit against attorneys who had previously handled the case, and to have the house returned to her. Zamos had no intention of keeping those promises, the complaint alleged.
After that suit was filed, Zamos sent to Stroud the transcripts of three hearings on the foreclosure suit. The transcripts indicated that Brookes was told and agreed that she was releasing all claims to the house, that she was told that Zamos would not represent her in the malpractice suit, and that Brookes did not object to having Zamos relieved as counsel with regard to the claims against the non-settling defendants, who had defaulted.
The fraud suit went to trial after a motion for summary judgment was denied. Zamos won on a nonsuit, then sued for malicious prosecution.
Justice Janice Rogers Brown, writing for the high court, said the Div. Five panel was correct and that contrary decisions—two by this district’s Div. Seven and one by the Fourth District’s Div. Three—were wrong. Those courts held that malicious prosecution liability will not lie against an attorney who had probable cause to bring suit according to facts known at the time of filing.
One of those rulings, Brown noted, relied on a 1986 Supreme Court decision holding that the plaintiffs, who had won at trial, but settled for a reduced amount in exchange for the dismissal of the defendants’ appeal, could not sue the defendants’ insurer for malicious prosecution of the appeal.
The plaintiffs in that case, Brown explained, claimed that the defendants had pursued the appeal solely to force the plaintiffs to take less money and to delay payment. But there is a distinction, Brown said, “between continuing a prosecution and continuing a defense.”
Every other state that has addressed the question imposes a duty to dismiss a suit upon learning there is no probable cause to continue it, Brown said, adding that is the position of the Restatement Second of Torts.
The jurist elaborated:
“Just as it is without support in authority, the limitation defendants urge is also without support in principle....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....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.’”
Applying that reasoning to Zamos’ suit against Stroud, Brown said the anti-SLAPP motion should have been denied because Zamos demonstrated a probability of winning on the merits.
Once he read the transcripts, Brown wrote, Stroud should have known that the alleged fraudulent promises to try to get Brookes’ house back and to represent her in a suit against her previous lawyers were never made, and that Brookes had not objected to Zamos’ withdrawal from the wrongful foreclosure suit when given the opportunity to do so in open court.
Zamos and Stroud both argued their own cases in the Court of Appeal and the Supreme Court. The Association of California Insurance Companies filed an amicus brief in support of Stroud.
The case is Zamos v. Stroud, 04 S.O.S. 1956.
Copyright 2004, Metropolitan News Company