Oren Royal Oaks Venture v. Greenberg, Bernhard, Weiss & Karma, Inc.

• Decision Date: 31 December 1986
• Citation: 728 P.2d 1202,42 Cal.3d 1157,232 Cal.Rptr. 567
• Court: California Supreme Court
• Parties: , 728 P.2d 1202 OREN ROYAL OAKS VENTURE, Plaintiff and Appellant, v. GREENBERG, BERNHARD, WEISS & KARMA, INC., et al., * Defendants and Respondents. L.A. 32020.

Page 567

232 Cal.Rptr. 567

42 Cal.3d 1157, 728 P.2d 1202

OREN ROYAL OAKS VENTURE, Plaintiff and Appellant, v. GREENBERG, BERNHARD, WEISS & KARMA, INC., et al., ^* Defendants and Respondents.

L.A. 32020.

Supreme Court of California.

Dec. 31, 1986.

Rehearing Denied Feb. 11, 1987.

Greenberg, Glusker, Fields, Claman & Machtinger and Garrett L. Hanken, Los Angeles, for plaintiff and appellant.

Gilbert, Kelly, Crowley & Jennett, Patrick A. Mesisca, Jr., and James M. Fischer, Los Angeles, as amici curiae on behalf of plaintiff and appellant.

MacDonald, Halsted & Laybourne, Brian G. Gough and Gary L. Urwin, Los Angeles, for defendants and respondents.

Jones & Wilson, William John Rea, Jr., Los Angeles, Haight, Dickson, Brown &amp Bonesteel, Lori R. Behar and Robert L. Kaufman, Santa Monica, as amici curiae on behalf of defendants and respondents.

GRODIN, Justice.

In this case we must determine what role the statutory "privilege" for statements made in the course of a judicial proceeding (Civ.Code, § 47, subd. (2) [hereafter § 47(2) ] ¹ plays in an abuse of process action. In particular, we must decide whether section 47(2) precludes a court from making evidentiary use of statements made during negotiation sessions in determining whether a defendant in an abuse of process action acted for an improper "ulterior" purpose.

As we shall explain, we conclude that section 47(2) does not bar the evidentiary use of such statements to establish the motive with which a defendant in an abuse of process action acted. As we further explain, however, we additionally conclude that even though the alleged statements in question here could properly be considered for their evidentiary value on the issue of motive, the facts alleged in the complaint and set forth in the declarations on the summary judgment motion are nonetheless insufficient to support an abuse of process action. Accordingly, we affirm the trial court's summary judgment in favor of defendants.

I

In the late 1970's, plaintiff Oren Royal Oaks Venture (Oren), a limited partnership, proposed to construct a 50-lot residential development in Encino on property adjoining the home of defendant Ronald Stanman. Stanman objected to the development because of its potential effect on the peace and tranquility of his neighborhood and opposed the tract map at planning commission hearings. Ultimately, the City of Los Angeles conditionally approved a tentative tract map of the development in December 1978.

In January 1979, Stanman filed an administrative mandamus action under the California Environmental Quality Act (CEQA) (Pub.Res.Code, § 21000 et seq.), challenging the sufficiency of the environmental impact report (EIR) relied on by the city in approving Oren's proposed subdivision, and requesting the court to vacate the city's approval. In connection with the action, Stanman sought a stay of the recordation of the final tract map. In September 1979, the trial court granted a temporary stay and set a hearing on the issue for November 1979. At the conclusion of the November hearing, the trial court granted summary judgment in favor of the city and dissolved the stay.

Several months later, Stanman retained a second law firm, Greenberg, Bernhard, Weiss & Karma, Inc. (hereafter Greenberg), to prosecute an appeal of the adverse judgment in the CEQA action. After some negotiation with Oren, Greenberg filed a notice of appeal on Stanman's behalf in July 1980. Shortly thereafter, Greenberg filed a related petition for an extraordinary writ of mandate in the Court of Appeal in which the appeal was pending, seeking a stay order to prohibit the developer from undertaking further physical alterations on the property pending the resolution of the appeal. In fact, supersedeas in the appeal would have been the proper procedure to obtain a stay. Nonetheless, in October 1980, the Court of Appeal granted a temporary stay as requested; though later modified in some respects, the stay remained in effect throughout the pendency of the appeal. ²

In May 1981, while the CEQA appeal was still pending in the Court of Appeal, Oren filed the present action against Stanman and the attorneys who had represented him in the CEQA litigation, seeking damages for abuse of process and conspiracy to abuse process. The complaint alleged, inter alia,that "[d]efendants' actual and sole purpose in bringing and pursuing the Mandate Proceedings was and is to obtain a collateral advantage over plaintiff by coercing plaintiff to pay money to Stanman in order to get him to dismiss the Mandate Proceedings." The complaint asserted that defendants had offered to dismiss the CEQA action in return for Oren's payment of money or conveyance of a designated lot to Stanman and suggested that this offer showed that the CEQA proceedings were not pursued to protect environmental and planning interests but rather to obtain the payment of money. Averring that "[t]he use of the Mandate Proceedings to obtain payment of money is not a proper purpose of the Mandate Proceedings," the complaint alleged that defendants should be held liable for abuse of process for using the CEQA mandate proceeding for such a purpose. The complaint, however, did not purport to state a cause of action for malicious prosecution, and did not allege that Stanman had brought the CEQA action without "probable cause" to believe that the action was meritorious. The omission of a cause of action for malicious prosecution may have been based on the fact that, at the time the complaint was filed, the CEQA action had not yet been terminated, and thus Oren could not allege the "favorable termination" that is one required element of that cause of action. (See 4 Witkin, Summary of Cal. Law (8th ed. 1973) § 246, p. 2525 and cases cited.)

In July 1981, two months after the abuse of process action had been filed, the Court of Appeal ruled in Oren's favor in the CEQA appeal, affirming the trial court judgment and vacating the stay that it had previously issued. Despite the "favorable termination" of the CEQA action, however, Oren did not seek to amend its complaint in this proceeding to allege a cause of action for malicious prosecution. Instead, it continued to pursue the action solely on abuse-of-process and conspiracy-to-abuse-process theories.

After the parties had engaged in some discovery with respect to the abuse of process action, defendant Greenberg--the law firm that had represented Stanman in connection with the CEQA appeal--filed a motion for summary judgment. Greenberg contended that, as a matter of law, there was no basis on which to establish liability against it for abuse of process or conspiracy to abuse process because of "[ (1) ] the privilege available under California Civil Code Section 47(2) and/or [ (2) ] the fact that the acts constituting the alleged abuse are insufficient to support the cause of action." Emphasizing that Oren's claims against it relied heavily on statements that its attorneys had made during settlement negotiations with regard to the appeal, Greenberg maintained that by virtue of section 47(2) such statements could not properly be considered in determining its potential liability for abuse of process. In support of its contention, Greenberg cited the then-recent decision in Asia Investment Co. v. Borowski (1982) 133 Cal.App.3d 832, 184 Cal.Rptr. 317, which had rejected an abuse of process claim on similar facts.

In its opposition to the summary judgment motion, Oren maintained that its abuse of process action was not based on the statements made in the settlement negotiations alone, but on the entire course of conduct of Stanman and his attorneys which demonstrated that the CEQA action had not been brought to protect environmental values but to obtain a monetary settlement. Relying on language from this court's decision in Spellens v. Spellens (1957) 49 Cal.2d 210, 232-233, 317 P.2d 613. ³ Oren contended that the contents of settlement negotiations could properly be considered in determining whether a party or his attorney had acted with a wrongful "ulterior purpose" that is an element of the abuse of process tort, and it suggested that the Asia Investment decision, supra, 133 Cal.App.3d 832, 184 Cal.Rptr. 317, was incorrect insofar as it suggested that the provisions of section 47(2) precluded any consideration of such statements in an abuse of process action.

At the initial hearing on the summary judgment motion, the trial court noted its uncertainty as to the compatibility of the Asia Investment and Spellens decisions. The court ultimately denied Greenberg's motion for summary judgment, suggesting that Greenberg might want to challenge the ruling in a writ proceeding to obtain an appellate court resolution of the issue. Thereafter, Greenberg did petition for such a writ, and the Court of Appeal--without issuing an alternative writ--granted a peremptory writ of mandate, directing the trial court to grant summary judgment in Greenberg's favor. As the controlling authority, the Court of Appeal cited Asia Investment. Oren filed a petition for hearing in this court seeking review of the Court of Appeal decision, but the peremptory writ issued from the Court of Appeal before this court had an opportunity to act on the petition. (Cf. Palma v U.S. Industrial Fasteners, Inc. (1984) 36 Cal.3d 171, 180-181, 203 Cal.Rptr. 626, 681 P.2d 893.) We denied Oren's petition without prejudice to its right to appeal from summary judgment.

The case returned to the trial court, and that court, following the directions of the peremptory writ, granted summary judgment in favor of Greenberg. Oren appealed from the judgment.

On appeal, the Court of Appeal reconsidered the matter and concluded that it had erred in directing summary judgment in Greenberg's favor. After reviewing the application of section 47(2) in past decisions, the court concluded that "[w]hen the publication itself is alleged to be the tortious conduct ..., the privilege...