Rogers v. Peinado
| Decision Date | 28 November 2000 |
| Citation | 85 Cal.App.4th 1,101 Cal.Rptr.2d 817 |
| Parties | (Cal.App. 1 Dist. 2000) MAT J. ROGERS, Plaintiff and Appellant, v. RENE PEINADO et al., Defendants and Respondents. A088891 Filed |
| Court | California Court of Appeals Court of Appeals |
Trial judge: Hon. Ronald E. Quidachay
Counsel for plaintiff and appellant: Kenneth S. Katzoff, Robert R. Riggs,
Sung E. Shim, KATZOFF & RIGGS
Counsel for defendants and respondents: Samuel E. Meredith, Nicole L. Meredith,
VOGL & MEREDITH, Stephen T. Gargaro
CERTIFIED FOR PUBLICATION
Mat J. Rogers filed a complaint against Rene Peinado and his former attorneys, Herman A.D. Franck and Stephen Gargaro, alleging that they had maliciously prosecuted a counterclaim in a private arbitration of Rogers's action to foreclose on a mechanic's lien. Peinado, Franck and Gargaro demurred to the complaint, arguing that a malicious prosecution action could not be based on proceedings in a private, contractual arbitration. Citing Sagonowsky v. More (1998) 64 Cal.App.4th 122 and the language of the "private arbitration agreement," the trial court concluded that Rogers could not state a cause of action for malicious prosecution and sustained the demurrer without leave to amend.
We conclude that when Rogers and Peinado contracted to resolve their disputes by arbitration and made no exception for a subsequent judicial proceeding alleging malicious prosecution, they foreclosed pursuit of a judicial remedy for malicious prosecution against one another. In the absence of a contractual provision to the contrary, the aggrieved party is limited to the contract's remedy of private arbitration. We will therefore affirm the judgment in favor of Peinado.
We reach a different conclusion as to respondents Franck and Gargaro. Inasmuch as attorneys Franck and Gargaro were not parties to the contract between Rogers and Peinado, they may not take refuge behind the arbitration clause in that contract to avoid Rogers's tort claim for malicious prosecution. In our view, a claim in a contractual arbitration proceeding may be a prior action of the sort to support a malicious prosecution cause of action. Accordingly we will reverse the judgment with respect to Franck and Gargaro.
As this matter comes to this court following the sustaining of a demurrer, we treat the demurrer as admitting all material facts properly pleaded in the complaint. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) The material facts as alleged in Rogers's complaint are as follows:
Peinado hired Rogers to renovate and convert a building into condominium units. Peinado and Rogers signed a written agreement and Rogers performed the work, but a dispute arose over the cost of labor and materials for installing a staircase. When Rogers did not receive payment, he recorded a mechanic's lien and filed a complaint to foreclose on the lien. Rogers claimed he was owed $11,085.
Ultimately the dispute was submitted to an arbitrator from the American Arbitration Association pursuant to an arbitration provision in the parties' written agreement. In the arbitration, Peinado asserted a counterclaim for $8,050 for various construction defects. Peinado also sought damages resulting from an "improper mechanics lien" and "other actions" by Rogers.
Franck and Gargaro represented Peinado in the arbitration proceeding. After considering the evidence submitted by the parties, the arbitrator awarded Rogers $11,818.08. The arbitrator denied Peinado's counterclaim in its entirety.
Rogers filed a petition to confirm the arbitration award in San Francisco County Municipal Court, which Peinado opposed by filing a petition to vacate the arbitration award. The court granted Rogers's petition, denied Peinado's petition, and entered judgment in accordance with the award of the arbitrator.
Peinado made other attempts to overturn the arbitration award, including filing a motion to set aside the judgment, an appeal with the appellate department of the superior court, a motion to stay enforcement of the judgment without posting bond, and a motion to transfer the case to this court. None was successful.
Rogers filed his complaint for malicious prosecution after defeating the attempts to overturn the arbitration award. He alleged that Peinado, Franck and Gargaro had no probable cause for bringing the counterclaim, and that the purpose of the counterclaim and other tactics both during and after the arbitration proceedings was to punish him and increase his litigation expenses beyond the amount of his recovery.
Peinado, Franck and Gargaro filed a demurrer to the complaint on the ground that it failed to state facts sufficient to constitute a cause of action. Peinado, Franck and Gargaro asserted, inter alia, that a malicious prosecution action could not be based on a private arbitration.
The trial court sustained the demurrer without leave to amend as to the entire complaint and Rogers appealed.1
When reviewing an order sustaining a demurrer without leave to amend, we determine whether the complaint states facts sufficient to constitute a cause of action, or whether any defects can be cured by amending the complaint. (Blank v. Kirwan, supra, 39 Cal.3d at p. 318.) We may consider matters that may be judicially noticed. 2 (Ibid.)
In order to establish a cause of action for malicious prosecution, a plaintiff must plead and prove that a prior action was commenced by or at the direction of the defendant, that the prior action terminated in plaintiff's favor, and that the prior action was brought without probable cause and initiated with malice. (Crowley v. Katleman (1994) 8 Cal.4th 666, 676.) Upon a sufficient showing, the plaintiff in the subsequent malicious prosecution action may establish a cause of action against the party who brought the prior suit as well as that party's attorneys. (Sheldon Appel Co. v. Albert & Oliker (1989) 47 Cal.3d 863, 881-882.)
We begin our analysis of the claims at issue here with a review of Sagonowsky v. More, supra, 64 Cal.App.4th 122 (Sagonowsky) which the parties discuss at length in urging their respective positions, and upon which the trial court relied.
Sagonowsky involved malicious prosecution actions brought against attorney More who had represented the Sagonowsky plaintiffs' adversary in a private contractual arbitration proceeding. Sagonowsky purchased a four-unit apartment, and later entered a tenancy in common agreement with three others, including tenant Searle who had lived in the building for some years. The agreement contained an arbitration clause. When a dispute arose under the agreement, Searle made a demand for arbitration against Sagonowsky and cotenants K and M, who responded by naming Searle as a defendant in a complaint they filed in San Francisco Superior Court. Searle successfully moved to compel arbitration of the superior court action. An arbitrator ultimately entered an award denying Searle's claim, as well as the cross-claim of Sagonowsky and her two cotenants. Thereafter Searle's adversaries in the arbitration proceeding filed actions for malicious prosecution against Searle's attorney Antonia More (More).
On More's demurrer to the [consolidated] complaints, the trial court dismissed the actions, finding that a malicious prosecution action was not available to the Sagonowsky plaintiffs. (Sagonowsky, supra, 64 Cal.App.4th at p. 127.) Division Four of this court agreed: "[O]n these facts we find the trial court did not err in sustaining the demurrer to the cause of action for malicious prosecution on the basis that the private, contractual arbitration which terminated in [the appellants'] favor was not a 'prior action' of the sort which will support such a claim." (Id. at p. 134, fn. omitted.)
The Sagonowsky court addressed as a question of first impression whether a private contractual arbitration will support a claim for malicious prosecution. 3 Sagonowsky acknowledged that a malicious prosecution action may be based on a prior judicial arbitration (Stanley v. Superior Court (1982) 130 Cal.App.3d 460, 472), or on administrative proceedings (Hardy v. Vial (1957) 48 Cal.2d 577, 581; Nicholson v. Lucas (1994) 21 Cal.App.4th 1657, 1664). Nevertheless, the court concluded that contractual arbitration was not a prior action which would support a claim for malicious prosecution. Sagonowsky reasoned that contractual arbitration was fundamentally unlike judicial arbitration or an administrative proceeding. With respect to judicial arbitration, the court observed: "The crucial difference between the two types of arbitration is that a judicial arbitration does not arise from an agreement to arbitrate entered into by the parties, but is mandated by the Legislature as to certain civil cases filed in court." (Sagonowsky v. More, supra, 64 Cal.App.4th at p. 132.) With respect to administrative proceedings, the court explained that persons subjected to an administrative proceeding have "well and truly been hailed into the proceeding," and have had to defend themselves in a public forum. (Id. at p. 133.) "In contrast[,] appellants expressly contracted for private arbitration and defined the scope of disputes subject to that arbitration broadly . . . ." (Ibid.)
Sagonowsky then analyzed the two arbitration clauses in two contracts between the cotenants and found that "the intent of the parties as expressed in both agreements was to strictly limit recourse to judicial remedies and submit 'any dispute' regarding each agreement to private arbitration." (Sagonowsky v. More, supra, 64 Cal.App.4th at p. 134.) Of course, if More did not enter into either contract,4 the contractual language could only express the intent of the Sagonowsky plaintiffs.
Thus, Sagonowsky implicitly treats equally both the adversary (Searle), who signed the agreement, and the attorney (More) who represented...
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