Metropolitan News-Enterprise


Tuesday, February 17, 2009


Page 1


Malicious Prosecution Suit Allowed Against Long Beach Firm


By a MetNews Staff Writer


The Court of Appeal for this district has allowed a malicious prosecution suit to go forward against a Long Beach law firm.

Div. Two Wednesday, in an unpublished opinion by Justice Judith Ashmann-Gerst, affirmed Los Angeles Superior Court Judge Raul Sahagun’s order denying an anti-SLAPP motion brought by Matthew Kinley and his firm, Tredway, Lumsdaine & Doyle, and their clients, Dale and Darlene Kreinkamp.

Kinley represented the Kreinkamps in an action against Damon and Teresa St. Germain for breach of a contract to sell residential real estate. Evidence presented in connection with the later anti-SLAPP motion indicated that the Kreinkamps agreed to pay the St. Germains $675,000, of which $150,000 would be paid outside of escrow so that the Kreinkamps could maintain their existing basis and avoid a property tax increase.

Escrow failed to close within the time specified in the contract, and a week later the St. Germains cancelled the escrow and agreed to sell the property to someone else. The Kreinkamps filed suit, alleging that they had a binding contract to purchase the property at the price set forth in the escrow agreement, with no mention of the additional $150,000.

The Kreinkamps, represented by the Tredway firm, recorded a lis pendens at the time of filing. They subsequently filed three amended complaints, none of which mentioned the additional purchase money.

The St. Germains subsequently moved to cancel the lis pendens and for summary judgment. In granting both motions, the judge cited the deposition testimony of the broker, who said the purchase agreement was unsigned by the St. Germains and that the payment outside escrow was agreed to orally and never incorporated into any writing.

The Kreinkamps’ stated belief that they had a binding contract, the judge said, were insufficient to create a triable issue with respect to the contentions that a contract was formed and that there was a sufficient writing to avoid the defense of the statute of frauds. The correspondence, the judge ruled, showed that, at best, the parties were still negotiating a payment structure when the escrow expired.

In their malicious prosecution suit, the St. Germains claimed that “no reasonable attorney would have believed that the KREINKAMPS had a legally-tenable claim against the ST. GERMAINS.” In response to the ensuing anti-SLAPP motion, the St Germains acknowledged that free speech and petition rights were implicated, but argued that they would likely prevail on the merits.

Sahagun ruled that the plaintiffs had established a prima facie case of malice prosecution, and denied the anti-SLAPP motion. He found that the attorneys should have realized, at some point prior to the grant of summary judgment, that there was no probable cause to believe that the St. Germains had breached a valid contract.

Ashmann-Gerst, writing for the Court of Appeal, said the trial judge was correct. No reasonable attorney, she said, would have sued for breach of a contract to purchase real property without a signed agreement.

The jurist rejected the attorneys’ argument that the plaintiffs had probable cause to sue based on the St. Germains’ admission, on deposition, that there was an oral agreement; the correspondence between the parties; the fact that the St. Germains had initialed the agreement, even though they did not sign it; and the possible application of estoppel.

Those contentions fail, Ashmann-Gerst explained, because they were not argued in the underlying litigation and thus could not be the basis for a finding that probable cause existed at the time. The firm, she said, cannot “escape liability for the theories that it advanced in the underlying action by arguing that it could have argued other theories that may have been tenable.”

All of the Kreinkramps’ pleadings in the underlying action, the justice noted, asserted the existence of a signed contract to purchase the property for $525,00 yet no signed contract was ever produced. While the firm argued that it had a copy of the agreement when it filed suit, and believed that the original had been signed, the firm should have dismissed the action once it learned that there was no signed agreement.

As for whether the St. Germains made a prima facie showing of malice, the justice agreed with Sahagun that malice may be inferred because the Kreinkamps—who filed, but abandoned, an appeal from the underlying judgment—continued to pursue the action in the face of unfavorable rulings and wavered, in their pleadings and discovery responses, between claiming that the agreed purchase price was $525,000 and that they had actually agreed to pay $675,000, and because their attorneys were aware of the inconsistencies but continued to press the case.

Attorneys on appeal were Raul L. Martinez and Kenneth C. Feldman of Lewis Brisbois Bisgaard & Smith for the Tredway firm and its co-defendants, and Paul S. White of Fletcher, White & Adair for the St. Germains.

The case is St. Germain v. Tredway, Lumsdaine & Doyle, B202459.


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