Wednesday, November 6, 2002
Court of Appeal Rejects Malicious Prosecution Suit Against Law Firm
Fourth District’s Div. Three Says Haight, Brown & Bonesteel Fairly Relied on Client’s Version of Facts
By KENNETH OFGANG, Staff Writer/Appellate Courts
A well-known local law firm did not engage in malicious prosecution by pursuing a misrepresentation suit against the sellers of a condominium based on information provided by the client, the Fourth District Court of Appeal has ruled.
In an Oct. 3 opinion, certified Monday for partial publication, Justice Richard Aronson said the suit pressed by Haight, Brown & Bonesteel and Newport Beach lawyer George C. Rudolph on behalf of Cynthia Ping was supported by probable cause as a matter of law.
Ping purchased the three-bedroom unit in 1991 for more than $168,000. In 1996, with the mortgage in arrears and $140,000 still owing, Ping allowed the bank to foreclose.
The property was eventually sold for $110,000. Ping, after being sued by the homeowner’s association for unpaid assessments, cross-complained against the association and the sellers, Jeffrey and Marta Morrison, claiming they failed to disclose defects in the premises.
The Morrisons moved for summary judgment, which was granted on the ground that there was insufficient evidence that the alleged failure to disclose caused Ping to lose her property.
Ping’s motion for new trial—based on an architect’s declaration that the property had major defects, an appraiser’s declaration that the majority of the decline in the value was due to the defects and the homeowner’s related litigation against the developer, and a declaration by the new owner saying that the upstairs floor was tilting—was denied.
Ping dismissed her appeal. Subsequently, the Morrisons sued Rudolph, who originally brought the cross-complaint, and Haight Brown—but not Ping—for malicious prosecution.
Orange Superior Court Judge Richard O. Frazee granted the law firms’ motion for summary judgment. The jurist said the Morrisons could not show that the cross-complaint was “so totally and completely without merit that no reasonable attorney would find the claim tenable.”
Attorneys, he noted, are entitled to rely on information provided by the client in determining whether to file suit. The only exception, he explained, is where the attorney has specific factual knowledge that the client’s version of events is not accurate.
Ping’s attorneys, the justice concluded, were entitled to rely on what she told them about her situation.
“Here, Ping told her lawyer she could not afford to pay both her mortgage and the repairs necessary to stay in her home; that she was thus forced to choose foreclosure; and that if the Morrisons had disclosed the defects, she would never have bought the condo,” Aronson reasoned. “Ping also alleged the Morrisons knew of the defects and intentionally failed to disclose them. From a legal perspective, Ping’s action was tenable as a routine claim of misrepresentation in the sale of real estate: the Seller lied, the Buyer relied, and but-for the lie, the Buyer would not have suffered damage (in this case foreclosure).”
The jurist rejected the argument that the summary judgment in the underlying action was sufficient to create a triable issue as to whether the lawyers had probable cause to bring the cross-complaint.
“[T]he Morrisons do not contend Ping lied when she said she chose foreclosure or when she claimed she would not have bought the condo if she had known of its defects,” the justice wrote. “Even if she had lied, the Morrisons would have a malicious prosecution claim only against Ping, not her attorneys.”
In an unpublished portion of the opinion, the justice rejected Haight Brown’s motion for sanctions based on taking a frivolous appeal.
The motion, Aronson noted, was based on the claim that the malicious prosecution suit was barred by the statute of limitations, an issue not raised in the trial court.
“To reach HB&B’s newly-raised statute of limitations defense, decide the issue in HB&B’s favor (a result far from inevitable), and impose sanctions now would encourage parties to sandbag their opponents with arguments saved for appeal,” he wrote. “This we will not do.”
Attorneys on appeal were Laguna Hills sole practitioner John K. Saur for the Morrisons, Randall A. Miller and Douglas J. Collodel of Sedgwick, Detert, Moran & Arnold for Rudolph, and Roy G. Weatherup, Bruce Cleeland, Jon M. Kasimov and J. Alan Warfield of Haight, Brown & Bonesteel for their firm.
The case is Morrison v. Rudolph, 02 S.O.S. 5649.
Copyright 2002, Metropolitan News Company