Malicious Prosecution Case Not Barred by Sanctions Denial

Tuesday, December 9, 2025

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Court of Appeal:

Malicious Prosecution Case Not Barred by Sanctions Denial

Opinion Declines Defendant’s Invitation to Expand ‘Interim Adverse Judgment Rule’ to Include Ruling Disfavoring Plaintiff in Earlier Underlying Litigation Between Parties

By Kimber Cooley, associate editor

Div. Eight of this district’s Court of Appeal held yesterday that an anti-SLAPP motion was properly denied as to a malicious prosecution case brought by a mediator against an attorney who earlier sued the arbitrator for breach of fiduciary duty relating to the handling of a neighbor dispute, finding that a discretionary sanctions ruling in the underlying case that favored the lawyer did not establish that the later-filed case was without minimal merit.

Justice John Shepard Wiley Jr. authored yesterday’s opinion, saying that a trial judge’s declination to terminate proceedings as a sanction for filing a claim without evidentiary support under Code of Civil Procedure §128.7 did not trigger the so-called “interim adverse judgment rule” which holds that certain rulings favoring the plaintiff in the underlying case may destroy the ability of the adverse party to file malicious prosecution claims based on the lawsuit.

The judicially-created rule originated in cases that reached a verdict after trial but has been extended to include denials of defense summary judgment motions, directed verdict requests, and similar efforts seeking pretrial termination of the underlying matter.

Wiley said that “we reject” the defendant’s effort to “enlarge the interim judgment rule,” writing:

“Because the denial of a sanctions motion does not necessarily show the underlying lawsuit had some merit, this court ruling does not qualify as an interim judgment adverse to [the malicious prosecution plaintiff.]”

Anti-SLAPP Protections

Seeking the protection of California’s anti-SLAPP law, found at Code of Civil Procedure §425.16, was Jinshu Zhang, an attorney who purchased a residence subject to the Palos Verdes Home Association in 2000. In 2017, he filed a claim with the homeowners’ group over a branch on a neighbor’s property that he alleged blocked his view.

The group had local attorney Charles Peterson of Stonebridge Mediation retained to resolve disagreements between neighbors on an as-needed basis.

After Peterson was unable to secure an agreement between the parties over the branch, the mediator told the association that he planned to prepare an award denying Zhang’s application on the grounds that the view was not significantly impaired and that the association’s tree-trimming rules did not apply because Wood’s property was not directly adjacent to Zhang’s home. The association then denied the request itself.

In 2017, Zhang, representing himself, filed a complaint against Peterson and the group for breach of fiduciary duty, pointing to an entry on the association’s website showing Peterson’s photo and describing him as the “View Dispute Arbitrator” under a caption titled “Board of Directors” as evidence of a qualifying relationship between the parties. Peterson denied any involvement with the committee.

Terminating Sanctions

After the homeowners’ group settled with Zhang, Peterson moved for terminating sanctions, arguing that the suit was brought without any evidentiary support for a fiduciary relationship in violation of §128.7. In July 2020, Los Angeles Superior Court Judge Michael P. Vicencia denied the request by way of a one-sentence order.

Vicencia eventually granted a defense motion for nonsuit, and judgment was entered in favor of Peterson in August 2021. In November 2022, Peterson filed a complaint against Zhang, asserting a claim for malicious prosecution.

Then-Los Angeles Superior Court Judge Mel Red Recana (now retired) denied Zhang’s anti-SLAPP motion in December 2023. Yesterday’s opinion, joined in by Presiding Justice Maria E. Stratton and Justice Victor Viramontes, affirms the order.

Wiley noted that the parties do not dispute that Zhang satisfied the first prong of the anti-SLAPP analysis—that the claim arose out of protected activity—and so the burden shifted to Peterson to establish that his causes of action had at least minimal merit, a threshold that the court said was met.

Interim Adverse Judgment Rule

The jurist wrote:

“Zhang’s most substantial objection…is that he previously beat Peterson’s motion for sanctions, and so—as a preclusive matter—his victory there should crush Peterson’s later malicious prosecution suit, which Zhang argues just rehashes the same old evidence as before. Zhang claims the ‘interim adverse judgment rule’ requires this result.”

Rejecting that assertion, Wiley said that “for good reason no precedent applies this rule to a motion for sanctions under section 128.7” and remarked:

“The interim adverse judgment rule does not apply here because Zhang’s interim ruling was not a judgment (or verdict) adverse to Peterson. Peterson brought a motion for sanctions under section 128.7 against Zhang, and the trial court denied it without comment. This denial did not culminate in a judgment in Zhang’s favor. Instead, Zhang ultimately lost his case against Peterson in a nonsuit, and the only judgment ended up in Peterson’s favor.”

He continued:

“More profoundly, the denial of a motion for sanctions does not necessarily reveal anything about the merit of a lawsuit. Trial courts have ‘broad discretion’ over whether to grant or deny such motions.”

Evidentiary Burden

The jurist added:

“To defeat Peterson’s sanctions motions, Zhang faced a light evidentiary burden….Zhang did not need even the evidence to create a triable issue of fact….By contrast, once Peterson fielded facts showing his case had minimal merit, Zhang’s evidentiary burden on his anti-SLAPP motion was heavy. Zhang had to respond with evidence showing he could defeat Peterson as a matter of law. It was not enough for Zhang merely to controvert Peterson’s evidentiary showing, for that would entitle Peterson to have a jury decide the factual disputes.”

Saying that “Zhang…proceeded in the face of a substantial and unjustifiable risk that his lawsuit was baseless” after Peterson filed a declaration in the underlying lawsuit denying any affiliation with the association other than as a mediator, he opined that “[f]or Zhang to continue to prosecute his case in the teeth of this awareness was ample proof he was pursuing ‘a purpose other than succeeding on the merits of the claim.’ ”

Wiley concluded that “the trial court was right to deny Zhang’s groundless anti-SLAPP motion.”

The case is Peterson v. Zhang, B334987.

Representing the plaintiff were Peterson, Thomas A. Vogele of Thomas Vogele & Associates APC, based in Carmel, and Gerald M. Serlin and Wendy S. Albers of the Woodland Hills-based firm Benedon & Serlin LLP. Acting for the defendant was Felix T. Woo of the Los Angeles firm FTW Law Group.