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Friday, November 17, 2023


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Fox Rothschild Again Faces Malicious Prosecution Suit

Court of Appeal Reverses Order Granting Law Firm’s Anti-SLAPP Motion, Scraps Award of Attorney Fees


By a MetNews Staff Writer


Five of the Court of Appeal for this district yesterday reversed an order granting the 910-lawyer firm of Fox Rothschild’s anti-SLAPP motion in an action against it for malicious prosecution, rejecting the view of Los Angeles Superior Court Judge Huey P. Cotton Jr. that the attorneys cannot be faulted for believing the assertions of their client over those of his adversary.

It was undisputed that the action stemmed from protected conduct under the anti-SLAPP statute, Code of Civil Procedure §425.16, and the issue was whether the plaintiff had shown that the litigation had minimal merit.

Justice Dorothy Kim authored the unpublished opinion which reinstates an action by Reuben Justin Cypers and Residual Income Opportunities, Inc. against Fox and others and takes away Cotton’s grant of attorney fees to the defendants in the amount of $225,000.

Fox represented Joseph R. Granatelli in a declaratory relief action founded on a putative contract action against Cypers and Residual. In that litigation, Cypers asserted that his purported signature on a contract was forged.

Cotton’s View

In a tentative ruling of Aug. 24, 2021, later adopted as the court’s order, Cotton recited:

“Fox defendants became attorneys of record February 2018. At that time the case was stayed. Fox defendants note they relied on Granatelli’s sworn declaration in the related action that the document was authentic; sworn statements by at least three third parties attesting to the authenticity of the document. They also relied on the fact that Cypers had a criminal history for fraud and that Granatelli retained an expert to evaluate the authenticity of the forged contract.”

The judge remarked:

“The court observes that it is not unreasonable and quite common in representing clients that an attorney would take his own client’s word over the representations of the other side. Thus, the court will not penalize the defendant for not blindly accepting the representations of Cypers with regard to the forgery, when their own client (and others) swore under oath that the opposite was true.”

No-Contest Plea

It turned out that the signature had been forged. On Jan. 28, 2019, Granatelli pled no contest to felony identity theft in connection with the signature.

However, during the time Fox represented Granatelli, the civil action was stayed pending the outcome of the criminal proceeding. In April 2019, he noted, attorney Lincoln Bandlow left Fox, set up his own practice, and took Granatelli’s case with him.

Cotton observed:

“The court file shows that between January 2019 and April 2019 there are only two entries in the court’s file, both are minute orders and only one reflects an appearance by any party. Certainly, Fox defendants were not actively prosecuting the case and stopped representing Granatelli long before the stay was lifted.”

He added:

“In the present case, there were conflicting accounts and sworn witness statements that a contract existed. Even after Mr. Granatelli pled no contest to the forgery charge, there still seemed a possibility that there was indeed a contract or agreement between the parties that had been lost or misplaced and it may be proven in a different way. This court saw a possible distinction from the fact of a contact and a forged document allegedly memorializing the agreement.”

Kim’s Opinion

Proceeding on facts not found by Cotton as the fact-finder, she declared that when Fox Rothschild and Bandlow substituted into Granatelli’s declaratory relief action on Feb. 22, 2018, they “were aware of the forgery.” This was apparently because the allegation of a forgery had been brought to the attention of the firm that had brought the action in 2017.

Kim continued:

“Thereafter, on December 20, 2019, Granatelli, through defendants and others, filed first amended complaints in the underlying action and case number LC106120. The first amended complaint in the underlying action omitted a copy of the putative contract and falsely alleged the existence of an identical contract with Cypers’s actual signature, claiming Cypers retained all originals and copies of that contract.

“Accordingly, plaintiffs made a prima facie showing that defendants lacked probable cause in continuing to prosecute the underlying action after learning that the putative contract upon which it was based had been forged.”

However, the amended complaint in the underlying action was filed by Brandon’s law office, not Fox, as was the complaint in the separate case.

With respect to the malice element, Kim wrote:

“We infer malice from defendants’ lack of probable cause in continuing to prosecute an action they knew was initiated based on a forged signature.”

Notwithstanding that Fox had no connection with the first amended complaint, she said:

“We particularly rely on the allegations in the malicious prosecution action and evidence that: (1) defendants filed the first amended complaint in the underlying action on behalf of a known forger, (2) the forgery went to the subject matter of the first amended complaint—the existence of an agreement between Granatelli and Cypers, and (3) defendants omitted a copy of the putative contract from the first amended complaint and falsely—or at best implausibly—alleged the existence of an identical contract with Cypers’s actual signature, all originals and copies of which Cypers retained.”

The case is Cypers v. Fox Rothschild, B316675.


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