Paulus v. Bob Lynch Ford, Inc.

• Citation: 139 Cal.App.4th 659,43 Cal.Rptr.3d 148
• Decision Date: 17 May 2006
• Docket Number: No. H028629.,H028629.
• Parties: Timothy PAULUS, Plaintiff and Appellant, v. BOB LYNCH FORD, INC., et al., Defendants and Respondents.
• Court: California Court of Appeals

43 Cal.Rptr.3d 148 139 Cal.App.4th 659 Timothy PAULUS, Plaintiff and Appellant,
v.
BOB LYNCH FORD, INC., et al., Defendants and Respondents. No. H028629. Court of Appeal, Sixth District. May 17, 2006.

[43 Cal.Rptr.3d 152]

Sean B. Absher, James M. Brennan, Stradling, Yocca, Carlson & Rauth, San Francisco, for Plaintiff and Appellant.

Timothy C. Davis, Damien P. Lillis, The Davis Law Firm, San Francisco, for Defendants and Respondents.

DUFFY, J.

139 Cal.App.4th 665

In an earlier lawsuit brought in 2003 (the prior suit), Timothy Paulus was sued by his competitor in an unsuccessful attempt to prevent him from developing a Ford automobile dealership in Morgan Hill, California. That prior suit was brought under Business and Professions Code section 17200 et seq. (the unfair competition law (UCL))¹ by an established, Gilroy-based Ford automobile dealership and its president/shareholder (Bob Lynch Ford, Inc. and Scott Lynch, respectively, and hereafter, collectively, Lynch).² After filing a series of demurrers, Paulus ultimately prevailed in the prior suit after the court sustained his demurrer without leave to amend.

In September 2004, Paulus brought this action against Lynch for claims arising out of the prior suit, including a cause of action for malicious prosecution. Lynch brought a special motion to strike Paulus's complaint under the anti-SLAPP (strategic lawsuits against public participation) statute, Code of Civil Procedure section

43 Cal.Rptr.3d 153

425.16.³ After granting the motion, the court awarded Lynch $40,000 and $1,819.96 in attorney fees and costs, respectively.

Paulus appeals from these two orders. He claims (among other things) that the motion to strike should have been denied because he presented a prima facie case of malicious prosecution — including showing that Lynch lacked probable cause to bring the prior suit and that Lynch prosecuted it with malice. We conclude that Paulus did not meet his burden under section 425.16 of demonstrating the probability that he would prevail on the merits of any of his claims. Specifically, Paulus did not show that Lynch lacked probable

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cause to bring the prior suit — an essential element of a malicious prosecution claim — because (1) malicious prosecution is a disfavored tort that is maintainable only if the underlying suit was one that no reasonable attorney would believe to be objectively tenable, (2) the UCL is a broad statute intended to protect both consumers and competitors against business practices that are unlawful, unfair or fraudulent, and (3) no authority expressly precluded the bringing of Lynch's UCL claim under the circumstances alleged in the prior suit. In addition, Paulus forfeited any challenge to the granting of the motion to strike his claims for abuse of process and intentional interference with contractual relations; in any event, he made no prima facie showing below in support of these claims.

We therefore find no error. Accordingly, we affirm the order granting the anti-SLAPP motion to strike. We also affirm the order awarding attorney fees and costs to Lynch.

PROCEDURAL HISTORY

I. Prior Suit

Lynch filed suit against Paulus and others on July 23, 2003. The complaint named the City of Morgan Hill (City) and related City entities and alleged that Lynch was "[a]cting as [an] injured competitor[] and as private attorney[] general" in bringing suit to enforce the UCL. In general, the complaint alleged that Paulus sought to establish a Ford automobile dealership in Morgan Hill on an 8.65 acre site (Dealership); the City Council approved several land-use applications submitted by Paulus for the Dealership; and that approval of the applications violated the Planning and Zoning Law (Gov.Code, § 65000 et seq.), the City's general plan, and the California Environmental Quality Act (CEQA, Pub. Res.Code, § 21000 et seq.). Lynch sought injunctive relief and mandamus to prevent development of the Dealership and to void the land-use-application approvals.

Lynch thereafter filed a first amended complaint. Again alleging that it had brought suit both "as [an] injured competitor[] and . . . as private attorney[] general," Lynch invoked the UCL for alleged violations of Planning and Zoning Law, the City's general plan, CEQA, and "[section] 1094.5, the statu[t]e requiring written finding[s] for quasi-judicial administrative decisions." The first amended complaint sought injunctive relief and mandamus.

Paulus, City, and related City entities filed jointly a demurrer to the first amended complaint. The demurring defendants argued, inter alia, that (1) Lynch had no legal standing to challenge the City's approval of the land-use applications for the Dealership, because it was not a "beneficially

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139 Cal.App.4th 667

interested" party as required for administrative mandamus proceedings brought under section 1086 in general and under section 1094.5 in particular; (2) public entities such as the City are immune from potential liability under the UCL; and (3) Paulus's acts taken in obtaining approval of the land-use applications did not constitute unfair business practices under the UCL. The court rejected the first and third arguments⁴ of the demurring defendants and adopted the second argument; accordingly, it sustained the demurrer of the City and related City entities and otherwise overruled the demurrer.

Lynch filed a second amended complaint. Lynch again alleged that it had brought the action both as an injured competitor and "for the interests of the general public as private attorney[] general . . . to enforce the [UCL]" for alleged violations of section 1094.5, the Planning and Zoning Law, the City's general plan, and CEQA. The pleading contained a new allegation that "the City Council authorized the City Manager to do everything necessary and appropriate to execute a development agreement with the private defendants which development agreement may result in the City paying the private defendants up to $1,225,000.00 of partial sales tax rebates over a period of 10 years," and that these potential rebates significantly threatened competition between Lynch and Paulus.⁵

Paulus, the City, and the related City entities filed a demurrer to the second amended complaint, arguing that (1) the City and its related entities were immune from liability under the UCL; and (2) Lynch failed to allege facts that Paulus had engaged in unfair competition under the UCL by committing unlawful business practices — the allegation was merely that Paulus had performed the lawful act of submitting a development application based upon land use approvals granted by the City.⁶ The court sustained the demurrer of

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the City and related City entities without leave to amend and sustained Paulus's demurrer with leave to amend.

Lynch filed a third amended complaint. It contained substantially the same allegations that had appeared in the second amended complaint. The new pleading did allege more specifically that Lynch had brought the action under the UCL to address, among other alleged violations, "[a] discriminatory government subsidy significantly threatening competition." The third amended complaint also alleged for the first time that Paulus had conspired

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with, and aided and abetted the "municipal defendants" through his submission of the land use applications and by obtaining the application approvals that Lynch claimed were unlawful.

Paulus filed a demurrer to the third amended complaint, which Lynch opposed. Paulus argued that Lynch had failed to state a claim under the UCL for unfair competition based upon either alleged unfair or unlawful business acts or practices. The court sustained this demurrer without leave to amend. Pursuant to the parties' stipulation, the court dismissed the action on March 30, 2004, following its order sustaining the demurrer.

Lynch filed a petition for writ of supersedeas and a petition for an emergency stay with this court. We denied both petitions on April 16, 2004 (H027269). Lynch sought review by the Supreme Court, which was denied on May 19, 2004.

II. The Present Action

On September 21, 2004, Paulus filed the present action against Lynch. The unverified complaint contained three claims: malicious prosecution, abuse of process, and intentional interference with contractual relations. Paulus alleged that the prior suit was filed by Lynch against Paulus; was concluded in his favor; was brought and prosecuted without probable cause; and was brought and prosecuted by Lynch maliciously. Paulus also alleged that Lynch "misused the legal system by bringing and prosecuting" the prior suit and that by doing so, Lynch interfered with Paulus's contract to purchase land to establish the Dealership.

Lynch filed a special motion to strike the complaint under section 425.16. It contended that (1) Paulus's suit arose out of Lynch's protected activity (i.e., petitioning the court through the prior suit); (2) Paulus bore the burden under the anti-SLAPP statute of presenting admissible evidence showing a reasonable probability that he would prevail on his claims; (3) the malicious prosecution claim was without merit because Lynch had probable cause for

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maintaining the prior action; and (4) the abuse of process and interference with contract claims were without merit because they were barred by the litigation privilege.⁷

In his opposition to the motion to strike, Paulus focused on the sufficiency of his malicious prosecution claim. Paulus argued that (1) the prior suit was undeniably terminated in Paulus's favor, thereby satisfying one malicious prosecution element; (2) the prior suit was founded upon legal theories that were patently without merit and Lynch therefore lacked probable cause in prosecuting the prior suit; (3) Lynch acted with malice in initiating and prosecuting the prior suit; and (4) because the motion to strike was...