Attorney Who Continues To Prosecute Action Not Supported By Probable Cause May Be Liable For Malicious Prosecution

In Zamos v. Stroud (2004) 32 C.4th 958, 12 C.R.3d 54, 87 P.3d 802, plaintiff attorneys had represented B in an action related to the foreclosure of her house. That action was settled. Nearly 2 years later, B, represented by S, sued plaintiffs for fraud, alleging that plaintiffs, to induce B to settle the foreclosure action, made but did not keep the following promises: (1) they would continue to represent her to judgment against the nonsettling defendants; (2) they would represent B in her malpractice lawsuit against her former attorneys; and (3) they would have her house returned to her. Shortly after the fraud complaint was served, plaintiffs sent S the reporter's transcripts of three hearings in the foreclosure action that allegedly proved that the foregoing promises were never made. Based on these transcripts, plaintiffs filed a summary judgment motion, but the motion was denied in view of B's declaration that the promises had indeed been made. The fraud action then proceeded to trial, and the trial judge granted plaintiffs' motion for nonsuit, finding that no reasonable jury could have ruled in B's favor.

Alleging that the fraud action had been filed to extort an unwarranted settlement, plaintiffs then filed the present malicious prosecution action against S. S responded with an anti-SLAPP motion under C.C.P. 425.16, arguing that, because his decision to file the fraud action was based on B's statements regarding the alleged promises, plaintiffs could not show a reasonable probability of success in the malicious prosecution action. The trial court dismissed the action. The Court of Appeal reversed. Held, judgment of the Court of Appeal affirmed.

(a) One of the elements of malicious prosecution is commencing, bringing, or initiating an action without probable cause. S contends that continuing to prosecute a lawsuit discovered to lack probable cause does not constitute the tort of malicious prosecution. In making this argument S relies heavily on the idea that the tort of malicious prosecution is a disfavored cause of action. It is true that the tort is disfavored, both because of its potential to impose an undue chilling effect on the ordinary citizen's willingness to report criminal conduct or to bring a civil dispute to court and because, as a means of deterring excessive and frivolous lawsuits, it has the disadvantage of constituting a new round of litigation itself. (2004 WL 829006, p. 4, citing Sheldon Appel Co. v. Albert & Oliker (1989) 47 C.3d 863, 254 C.R. 336, 765 P.2d 498 5 Summary (9th), Torts, Supp., §447A, and Wilson v. Parker, Covert & Chidester (2002) 28 C.4th 811, 123 C.R.2d 19, 50 P.3d 733, 5 Summary (9th), Torts, Supp., §448.) On the other hand, the characterization of malicious prosecution as a disfavored cause of action should not be employed to defeat a legitimate cause of action, or to invent new limitations on the substantive right, without support in authority or principle. Here, confining the tort to the initiation of an action without probable cause would not be supported by authority or principle. (2004 WL 829006, p. 5.)

(b) Although this is a question of first impression for this court, over 25 years ago, the Second Restatement of Torts stated that one who continues a civil proceeding that was properly begun, or one who takes an active part in continuing it, for an improper purpose after learning that there is no probable cause for the proceeding becomes liable as if he or she had initiated the proceeding. The Restatement's position has been adopted in numerous states and research has not revealed a single state that has declined to adopt the Restatement's view in this regard. (2004 WL 829006, p. 5.)

(c) Defendant relies on Vanzant v. DaimlerChrysler Corp. (2002) 96 C.A.4th 1283, 118 C.R.2d 48, 5 Summary (9th), Torts, Supp., §448, and Swat-Fame v. Goldstein (2002) 101 C.A.4th 613, 124 C.R.2d 556, 5 Summary (9th), Torts, Supp., §452. Both decisions relied on Coleman v. Gulf Ins. Group (1986) 41 C.3d 782, 226 C.R. 90, 718 P.2d 77, 5 Summary (9th), Torts, §437, and Coleman is distinguishable. In Coleman, the defendant in a malicious prosecution action had merely continued its defense of the underlying wrongful death action by filing an appeal. Here, defendant in the malicious prosecution action continued the prosecution of the underlying fraud action after learning that it was baseless. (2004 WL 829006, p. 6.)

(d) The limitation that defendant urges is also without support in principle. Malicious prosecution is actionable because it harms the individual against whom the claim is made, and because it threatens the efficient administration of justice. Continuing an action one discovers to be baseless harms the defendant and burdens the court system just as much as initiating an action known to be baseless from the outset. (2004 WL 829006, p. 7, citing Bertero v. National General Corp. (1974) 13 C.3d 43, 118 C.R. 184, 529 P.2d 608, 5 Summary (9th), Torts, §435.) Furthermore, holding an attorney liable for damages that result from prosecuting a civil claim after he or she learns that the claim has no merit encourages voluntary dismissals of meritless claims at the earliest stage possible, assists the efficient administration of justice, and reduces harm to individuals targeted by meritless claims. Moreover, by advising a client to dismiss a meritless case, the attorney will help the client avoid the cost of fruitless litigation and limit the client's exposure to liability for malicious prosecution. (2004 WL 829006, p. 7.)

(e) Defendant contended that holding that malicious prosecution includes continuing to prosecute a lawsuit discovered to lack probable cause would, contrary to public policy, divert an attorney's attention away from the zealous representation of his or her client by causing the attorney (1) to second-guess the merits of the litigation, and (2) to fear retaliation for malicious prosecution if the attorney argued for an extension of the law. This contention is without merit. Only those actions that any reasonable attorney would agree are totally and completely without merit may form the basis for a malicious prosecution action, and the same standard will apply to the continuation of the action. Applying the standard may be difficult, but applying it to the decision to continue to prosecute the action should be no more or less difficult than applying it to the decision to initiate the action. (2004 WL 829006, p. 7.)

(f) "Malicious prosecution . . . includes continuing to prosecute a lawsuit discovered to lack probable cause." (2004 WL 829006, p. 9, disapproving Swat-Fame, Vanzant, and Morrison v. Rudolph (2002) 103 C.A.4th 506, 126 C.R.2d 747, 5 Summary (9th), Torts, Supp., §452, to the extent inconsistent with the views expressed in the opinion.)

Witkin References

On malicious prosecution generally, see 5 Summary (9th), Torts, §418 et seq.

On malicious institution of civil proceeding, see 5 Summary (9th), Torts, §431 et seq.