Metropolitan News-Enterprise


Thursday, August 28, 2014


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C.A. Revives Malicious Prosecution Suit Against Law Firm

Panel Says Suit Not Barred by Statute of Limitations, Supported by Probable Cause


By a MetNews Staff Writer


The Court of Appeal for this district yesterday reinstated a malicious prosecution suit by two former employees of thermal imaging maker FLIR Systems Inc. against Latham & Watkins LLP.

Presiding Justice Joan Dempsey Klein, writing for Div. Three, said Los Angeles Superior Court Judge James R. Dunn erred in applying the one-year period in which to file professional liability claims, rather than the two-year limitation on malicious prosecution actions, to the suit by William Parrish and E. Timothy Fitzgibbons.

FLIR had sued the pair for misappropriation of trade secrets, among other things. Although the trial judge had denied their motion for summary judgment, the former employees prevailed at trial and were awarded more than $1.6 million in attorney fees and costs under Civil Code §3426.4, based on a finding that the trade secrets claim was brought in bad faith.

After the fee award was affirmed, the former employees sued Latham and one of its attorneys, Daniel Schechter, arguing that the firm should have known that the expert opinions on which the lawsuit relied were baseless.

The defendants brought an anti-SLAPP motion, which Dunn granted, ruling the plaintiffs could not prevail because the one-year limitation of Code of Civil Procedure §340.6 barred the claim.

While the appeal was pending, however, Div. Three decided another case, Roger Cleveland Golf Company, Inc. v. Krane & Smith, APC (2014) 225 Cal.App.4th 660, holding that the two-year limitation on actions for “wrongful act or neglect” under §335.1 applies to malicious prosecution actions, whether brought against lawyers or litigants.

With the court adhering to its Roger Cleveland holding, Klein explained, the remaining issue was whether the former employees might prevail on their contention that the underlying action was brought without probable cause. FLIR argued that they could not because the denial of summary judgment by the trial judge established that there was probable cause.

Klein concluded that the principle argued by FLIR, “the interim adverse judgment rule,” is inapplicable “given the trial court’s subsequent rulings,” including the bad-faith finding in conjunction with the award of attorney fees.

Attorneys who represented the parties on appeal were Michael J. Avenatti and Scott H. Sims of Eagan Avenatti, Brian J. Panish, Adam K. Shea and Kevin R. Boyle of Panish, Shea & Boyle, and Stuart B. Esner of Esner, Chang & Boyer for the plaintiffs and J. Michael Hennigan and Michael Swartz of McKool Smith Hennigan for Latham & Watkins.

The case is Parrish v. Latham & Watkins, B244841.


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