Roche v. Hyde

• Decision Date: 30 June 2020
• Docket Number: A150462,A150459
• Citation: 51 Cal.App.5th 757,265 Cal.Rptr.3d 301
• Court: California Court of Appeals Court of Appeals
• Parties: Brendan ROCHE, Plaintiff and Respondent, v. Thomas F. HYDE, Defendant and Appellant. Brendan Roche, Plaintiff and Respondent, v. Ram's Gate Winery, LLC, et al., Defendants and Appellants.

51 Cal.App.5th 757

265 Cal.Rptr.3d 301

Brendan ROCHE, Plaintiff and Respondent,

v.Thomas F. HYDE, Defendant and Appellant.

Brendan Roche, Plaintiff and Respondent,

v.Ram's Gate Winery, LLC, et al., Defendants and Appellants.

A150459

A150462

Court of Appeal, First District, Division 4, California.

Filed June 30, 2020

As Modified on Denial of Rehearing July 29, 2020

Counsel for defendant and appellant Thomas F. Hyde : Hinshaw & Culbertson, Edward F. Donohue, Jared W. Matheson

Counsel for defendants and appellants Ram's Gate Winery, LLC et al.: Arnold & Porter Kaye Scholer, Steven L. Mayer, Sean M. SeLegue, Jonathan W. Hughes, John S. Throckmorton

Counsel for plaintiff and respondent: Beyers Costin Simon, Bob Haroche, Peter L. Simon, Steven J. Bleasdell

STREETER, J.

In 2006, Ram's Gate Winery, LLC (Ram's Gate) purchased a Sonoma County winery from Dr. Joseph G. Roche (Roche) and his wife. Ram's Gate later sued the Roches for breach of contract, fraud, and negligent nondisclosure based on claims they withheld seismic information about the property and made misstatements concerning the ability to build on an existing building pad. The protracted litigation ultimately ended with Ram's Gate dismissing the action, Roche paying nothing to Ram's Gate, and Ram's Gate paying most but not all of Roche's attorney fees.

Roche then brought a malicious prosecution suit against Ram's Gate, two of its members, Michael John and Jeffrey O'Neill (collectively, Ram's Gate or the Ram's Gate defendants), along with their attorney, Thomas Hyde (collectively with Ram's Gate, the defendants), alleging they withheld documents in discovery that would have proved they knew or should have known the seismic information they claimed was kept from them when they bought the property from Roche. The defendants filed special motions to strike the complaint as a strategic lawsuit against public participation (anti-SLAPP motions).

Following denial of their anti-SLAPP motions, the Ram's Gate defendants and Hyde separately appealed. Though they largely take a common position in these now consolidated appeals, Ram's Gate and Hyde have appeared separately and have filed separate briefs, as they did in the trial court. Together, the defendants attack the denial of their anti-SLAPP motions from many angles—necessitating the extended discussion to follow—but at its core the single issue before us, put simply, is whether Roche made a sufficient showing that he was likely to succeed on the merits. We conclude he did and therefore affirm.

I. SUMMARY

While the ultimate issue may be put simply, that is not so for the case as a whole. We therefore pause at the outset to provide a summary of the key points of decision, intending with this précis to set forth an outline of what will follow. The two primary legal issues presented are (1) whether Roche met his prima facie burden of proving the underlying action was terminated in his favor and (2) whether Roche met his prima facie burden of proving Ram's Gate lacked probable cause to bring or maintain the underlying action against him.

Taking the favorable termination issue first, we begin with the principle that a unilateral dismissal raises a presumption of favorable termination. ( Sycamore Ridge Apartments LLC v. Naumann (2007) 157 Cal.App.4th 1385, 1400, 69 Cal.Rptr.3d 561 ( Sycamore Ridge ).) To determine whether the presumption has been rebutted, we evaluate the circumstances of the dismissal. (See Daniels v. Robbins (2010) 182 Cal.App.4th 204, 217, 105 Cal.Rptr.3d 683 ( Daniels ).) Here, that situational inquiry boils down to this: Where the underlying suit was unilaterally dismissed by Ram's Gate in the face of a terminating sanctions motion that was almost certainly going to be granted for discovery abuse, and where the dismissal was accompanied by a negotiated payment of some but not all of Roche's attorney fees—with Roche signing no settlement agreement, releasing no claims, and expressly reserving his rights—did the dismissal constitute a favorable termination in favor of Roche? On this record, we hold that the answer is yes. Because the modest discount on attorney fees that Ram's Gate received was a matter "ancillary" to the merits, under HMS Capital, Inc. v. Lawyers Title Co. (2004) 118 Cal.App.4th 204, 215, 12 Cal.Rptr.3d 786 ( HMS Capital ) it did not constitute a settlement.

The probable cause issue breaks down into four component parts, one of which is substantive and three of which are procedural.

First, as a substantive matter, we conclude that Roche has met his burden of showing that, under the tenability standard announced in Sheldon Appel Co. v. Albert & Oliker (1989) 47 Cal.3d 863, 254 Cal.Rptr. 336, 765 P.2d 498 ( Sheldon Appel Co. ), no reasonable attorney would have brought or maintained an action against Roche in these circumstances. In arriving at that conclusion, we address the following two questions: (1) Where transactional counsel for Ram's Gate had possession of allegedly concealed information prior to the closing of the sale, is knowledge of that information chargeable constructively to Ram's Gate by imputation under applicable agency principles? And (2) even if the allegedly concealed information is imputed to Ram's Gate, did Ram's Gate nonetheless have probable cause to sue on other grounds because it asserted various alternative theories of liability? On this record, we hold the answers to these questions are, respectively, yes, that under Wittenbrock v. Parker (1894) 102 Cal. 93, 36 P. 374 ( Wittenbrock ), Ram's Gate must be constructively charged with information in the hands of its transactional counsel, and no, that none of Ram's Gate's alternative theories of liability supplies an independent basis for probable cause because under Cuevas-Martinez v. Sun Salt Sand, Inc. (2019) 35 Cal.App.5th 1109, 248 Cal.Rptr.3d 200 ( Cuevas-Martinez ), none states an independent cause of action.

Second, under the interim adverse judgment rule as enunciated in Parrish v. Latham & Watkins (2017) 3 Cal.5th 767, 221 Cal.Rptr.3d 432, 400 P.3d 1 ( Parrish ), does a summary adjudication ruling in the underlying case in favor of Ram's Gate, finding triable issues of fact on several of Ram's Gate's claims of nondisclosure and misrepresentation, compel a finding as a matter of law that Ram's Gate had probable cause to sue? That issue, in turn, requires us to decide whether an exception to the interim adverse judgment rule recognized in Carpenter v. Sibley (1908) 153 Cal. 215, 94 P. 879 ( Carpenter ) for judgments procured by fraud or perjury applies.

As a matter of first impression, we hold that egregious discovery misconduct—here, the withholding of a critical piece of evidence in willful violation of multiple court orders, including a sanctions order, where the suppressed evidence likely would have resulted in a summary judgment victory for Roche—may provide a basis for applying the fraud or perjury exception under Carpenter . And we think the evidence supplies a prima facie basis for applying the exception in this case.

Third, in evaluating the merits of whether Roche bore his prima facie burden on lack of probable cause, must we draw all inferences for a malicious prosecution defendant seeking anti-SLAPP dismissal, contrary to the usual rule that, on review, we draw inferences for the non-movant in the " ‘ "summary-judgment-like" ’ " ( Sweetwater Union High School Dist. v. Gilbane Building Co. (2019) 6 Cal.5th 931, 940, 243 Cal.Rptr.3d 880, 434 P.3d 1152 ( Sweetwater )) proceedings at step two of the anti-SLAPP process? Pointing to the principles of tenability announced in Sheldon Appel Co. as they have been applied in Parrish and other cases, and emphasizing that this body of precedent establishes a substantive standard of liability that is highly generous to those accused of malicious prosecution, the defendants urge us to adopt a novel procedural exception and draw inferences for the movant and malicious prosecution defendant. We reject these arguments and apply conventional standard of review principles applicable to the review of anti-SLAPP denials, drawing all inferences in favor of the non-moving party and malicious prosecution plaintiff, Roche.

Fourth, how will the law of the case doctrine apply in this case going forward, on remand, following our affirmance of the denial of the defendants’ anti-SLAPP motions? We hold that, as to triable issues of fact, the only impact of the law of the case doctrine is to preclude a summary judgment motion by any of the defendants asserting the same grounds asserted in their anti-SLAPP motions, unless they later come forward with "additional or different evidence that would, as a matter of law, conclusively negate plaintiff's prima facie case." ( Bergman v. Drum (2005) 129 Cal.App.4th 11, 18, 28 Cal.Rptr.3d 112 ( Bergman ), italics omitted.) Following remand, therefore, the case may now proceed to trial, where Roche will have the burden of proving all elements of his malicious prosecution claim. At trial—except for rulings made in this opinion on issues of law on undisputed facts, which will provide binding guidance as the law of the case—the inferences we draw here from the record evidence shall have no effect on the matters to be tried.

II. BACKGROUND

A. History of the Winery Purchase

1. The Conforti Site Plan and the Boudreau Report

In the late 1980's, Roche and his wife, Genevieve,¹ purchased a 135-acre ranch in Sonoma County with the plan of establishing a winery on it. That they did, but not before commissioning two studies of the property. The first, a site plan depicting the location of the winery building and its orientation on the site, was prepared by architect Victor Conforti in February 1987 (the Conforti site plan). The second, a report by an engineering geologist, Eugene Boudreau, was prepared in July 1987 (the Boudreau Report). Boudreau's work was a seismic hazard study specifically required by the county because the property is located in a seismic...