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Monday, June 30, 2025

 

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Client May Rely on Lawyer’s Opinion Despite Lack of Experience in Area of Law—C.A.

Opinion Says Trial Court Improperly Added Specialty Competency Requirement for Advice-of-Counsel Defense in Malicious Prosecution Action

 

By a MetNews Staff Writer

 

Div. Three of the First District Court of Appeal has reversed a judgment against a landlord in a malicious prosecution action, finding that the trial court erred in rejecting the defendant’s affirmative defense—that she pursued the underlying unlawful detainer actions in good faith based on the advice of her lawyer—even though the attorney did not have specific experience in real estate law.

Justice Ioana Petrou authored Thursday’s opinion vacating the judgment against Sally Liu in favor of the four plaintiffs, saying:

“[T]he court found Liu could not have relied on [her lawyer’s] advice in good faith unless she proved [that he] was ‘competent’ or she had [reason to believe that he] was competent. Although the trial court acknowledged it was unaware of any California authority imposing such a requirement, it proceeded to do so based on…an insurer bad faith case…and non-California state cases. The trial court’s reliance on these authorities was in error.”

The defense was raised in litigation over whether two unlawful detainer actions—which were brought by Liu, a San Francisco property owner, against four tenants who had earlier filed a complaint against her for breach of the implied warranty of habitability—were maliciously pursued.

After the matters were consolidated, a jury found in favor of the tenants, Jose Ceran, Judy Judkins, Espetacion Medina, and Brian Medina, awarding each plaintiff between $5,000 and $10,000 in September 2015. Two months later, the tenants filed a new complaint against Liu, asserting a malicious prosecution claim and alleging that the unlawful detainer complaints had been filed without cause.

Attorney Consultation

Liu asserted that she filed the unlawful detainer complaint after consulting with her attorney, Paul McCarthy of the Oakland-based Law Offices of Beles & Beles. McCarthy is touted on the firm’s website as “the fastest writer in the west” and as a specialist “in writing motions, writs, and appeals.”

He testified at trial that he had advised Liu that she had a legal basis for filing the unlawful detainer actions after the tenants began sending their rent checks by restricted mail, causing them to be returned, unopened, to a post office location because Liu was not home during the attempted deliveries. However, McCarthy said that he had “probably” recommended that she first try to collect the money voluntarily, which she claims she did.

The attorney averred that he did not find it strange that Liu retained him, despite his specialty being unrelated to landlord-tenant disputes, saying “she just came to me,…we talked, and I offered to draft documents for her.”

Following a bench trial, then-San Francisco Superior Court Judge Harold E. Kahn, since retired, found in favor of the plaintiffs, saying:

“[N]o reasonable person…would have believed that there were reasonable grounds to bring and maintain the two [unlawful detainer] actions. Prior to filing…, [Liu] knew—or at the very least made no effort to determine if—all four plaintiffs had sent checks for the full amount of the rent to her by certified mail every month that the two…actions claimed that plaintiffs had not paid rent.”

He further determined that Liu “failed to prove that her reliance on Mr. McCarthy’s advice was in good faith,” saying that she had failed to show that she believed that he was competent in the area of landlord-tenant disputes.

Thursday’s opinion, joined in by Presiding Justice Alison M. Tucher and Justice Victor Rodríguez, orders the trial court on remand to “enter a judgment of dismissal in favor of Liu.”

Malicious Prosecution

Petrou pointed out that “there can be no viable claim for malicious prosecution” if the plaintiff in the underlying lawsuit had probable cause to believe her claims were “legally tenable.” Jurisprudence has established that such cause may be shown by proving that the party consulted a lawyer in good faith and honestly acted on the advice of counsel.

Applying these principles to the present case, the jurist wrote:

“The record…reflects that Liu accurately understood McCarthy’s advice—i.e., she had the legal right to file the unlawful detainer actions—and Liu testified that she filed the actions based on McCarthy’s advice. Liu also testified she would not have filed the unlawful detainer actions if McCarthy had advised her otherwise. The trial court’s statement of decision does not cite any evidence to the contrary.”

She remarked that “[w]hile the trial court appeared skeptical of Liu’s credibility…, it did not reject the advice of counsel defense on the basis that Liu failed to act honestly on McCarthy’s advice” and instead focused on whether she had reason to trust her attorney, given that he did not specifically specialize in landlord-tenant disputes.

Rejecting any specialty requirement, she commented:

“The court focused on McCarthy’s lack of experience with unlawful detainer actions as a basis for finding that Liu did not rely on ‘competent’ counsel. But McCarthy is an attorney in good standing with the State Bar of California, and the court failed to explain why that is insufficient.Competent’ counsel has been interpreted to simply mean an independent attorney [entitled to practice law] and there is nothing in this case that merits going outside of this definition.”

Inadequate Research

Kahn also suggested that Liu could not rely on McCarthy’s counsel in good faith because he performed insufficient legal research before advising his client. Faulting that logic, Petrou wrote:

“We are unaware of any California authority requiring clients to assess the depth or quality of their attorney’s research, doubtless because the duty of competence is one imposed on lawyers, and clients may rely on their attorneys to comply with this duty and inform them if they are unable to competently perform any legal tasks….A court cannot shift this burden to the client—and it may not impute to a client his or her attorney’s inadequate legal analysis so as to void good-faith reliance on counsel’s advice.”

She added:

“Rather than shifting an attorney’s burden onto his client, we employ a commonsense interpretation of ‘good-faith’ reliance on the advice of counsel. Black’s Law Dictionary defines ‘good-faith reliance’ as ‘[h]onest reliance that is free of pretext or disingenuousness.’…Here, nothing in the record indicates Liu was aware McCarthy’s advice was erroneous, or that she sought such advice for any purpose apart from determining whether she was legally entitled to file an unlawful detainer action….The record thus indicates Liu relied on McCarthy’s advice in good faith, and the malicious prosecution claim against her should have been dismissed based on her advice of counsel defense.”

The case is Ceron v. Liu, 2025 S.O.S. 1850.

 

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