Sangster v. Paetkau

• Decision Date: 30 October 1998
• Docket Number: No. A081624,A081624
• Citation: 68 Cal.App.4th 151,80 Cal.Rptr.2d 66
• Court: California Court of Appeals Court of Appeals
• Parties: , 98 Cal. Daily Op. Serv. 8764, 98 Daily Journal D.A.R. 12,193 Diane L. SANGSTER, Plaintiff and Appellant, v. Tyler M. PAETKAU et al., Defendants and Respondents.

Page 66

80 Cal.Rptr.2d 66

68 Cal.App.4th 151, 98 Cal. Daily Op. Serv. 8764,

98 Daily Journal D.A.R. 12,193

Diane L. SANGSTER, Plaintiff and Appellant, v. Tyler M. PAETKAU et al., Defendants and Respondents.

No. A081624.

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

Oct. 30, 1998.

Qualls & Workman, LLP, Daniel H. Qualls, Robin G. Workman, San Francisco, for appellant.

Brobeck, Phleger & Harrison, LLP, James N. Penrod, Karen Johnson-McKewan, Dana P. Veeder, Cooper, White & Cooper, James M. Wagstaffe, Matthew B. Pavone, Thomas Mark Di Franco, Hosie, Wes, Sacks & Brelsford, LLP, James F. Brelsford, Rachel A. Silvers, Nicole A. Wong, San Francisco, for respondents.

McGUINESS, J.

Diane L. Sangster appeals from summary judgment entered against her on her complaint for malicious prosecution against Phoebe Hearst Cooke (Cooke), the San Francisco Equestrian Festival (the Festival), Tyler M. Paetkau, Philip M. Battaglia, and the law firm of Donovan, Leisure, Newton & Irvine (Donovan Leisure) (collectively, respondents), arising from an underlying cross-complaint for fraud and breach of fiduciary duty filed against Sangster by Cooke and the Festival. ¹ We conclude that respondents established the existence of probable cause to bring the underlying cross-complaint and, therefore, affirm the summary judgment on Sangster's complaint for malicious prosecution.

I. FACTUAL AND PROCEDURAL BACKGROUND

Sangster was employed as Cooke's secretary beginning in 1989. Sangster's employment duties included assisting Cooke in creating and preparing printed programs for a horse show at the San Francisco Cow Palace sponsored by the Festival, Cooke and the Hearst Corporation. For several years, Sangster utilized the design services of Dennis Wozniak in designing and producing the programs. As part of his services, Wozniak acted as a broker, directly soliciting and receiving oral and written bids for printing and lithographic services in connection with the publication of the programs. Through 1991, Wozniak was paid for these brokerage services on a commission basis, and for his design services on an hourly basis. Wozniak would submit his own separate invoices for his hourly design services directly to Cooke or the Festival for payment.

In 1992, however, Sangster asked Wozniak to increase his markups on subcontractor invoices for the 1992 program without submitting his own bills to Cooke or the Festival. Wozniak agreed to do so. There is a dispute concerning whether or not Cooke knew of or agreed to this new arrangement. Sangster contends she did not conceal Wozniak's involvement in the 1992 program from Cooke or deceive her in any way, and Cooke actually knew at the time that Wozniak would be working on the 1992 program and approved of his involvement. Respondents, on the other hand, contend Cooke did not wish to employ Wozniak on the 1992 program, Sangster was aware of this, and she deliberately disobeyed Cooke's explicit instructions in this regard and then concealed from Cooke the fact of Wozniak's involvement.

At some point in 1992, Sangster informed Cooke of two different bids for printing the Festival's program: one for approximately $17,600; and a second, lower bid for approximately $14,600. The parties dispute the substance of what Sangster told Cooke about these bids and what Cooke herself understood. Sangster contends that she told Cooke the bids were for printing the program only and did not include the costs of typesetting, color separation and associated expenses. Respondents contend that Sangster represented the bids as covering the "total cost" of preparing the programs. Subsequently, when the programs were finished and Sangster presented Cooke with an invoice from Wozniak totaling more than $56,000, Cooke refused to pay.

In October 1992, Wozniak filed a breach of contract action against Cooke and the Festival for payment of his invoices in connection with the 1992 Festival program. Among other things, Wozniak's complaint alleged the existence of an "oral agreement" between himself, Cooke and the Festival whereby he "agreed to provide his graphic design services, organizational, film preparation and printing expertise in overseeing the production of the 1992 [Festival] Program, and [Cooke and the Festival] agreed to pay for the services rendered in producing the 1992 ... Program."

In his deposition, taken on November 20, 1992, Wozniak testified that Sangster never told him directly that Cooke did not want him to work on the 1992 program. He only learned that Cooke might have reservations about his working on the 1992 program during a single conversation with Cooke in early July 1992, when she told him that "she saw no reason why I would be doing anything on the design ... and that my work ... on that design was not necessary." Other than this one conversation, Wozniak did not speak to Cooke before presenting his invoice. Aside from Sangster's representations to him, he had no independent knowledge that Cooke approved of his working on the 1992 program or even knew he was doing so. Wozniak testified that he usually employed a 15 percent markup and had used that percentage in his original bid. However, on July 23, 1992, Sangster told him to raise his markup on his services to 20 percent and also mark up the printing and file preparation work "in order that [he] get paid," because Cooke "[f]or some reason ... was angry at [him]" and "was not going to pay [him] for [his] time...." Wozniak did so, in order to get paid. Wozniak testified that the "oral agreement" alleged in his complaint referred to his personal discussions and understanding with Sangster alone, and that he had no oral agreement directly with either Cooke or the Festival regarding the 1992 program. "The only difference" in 1992, Wozniak testified, was that this time rather than billing Cooke and the Festival for his time directly, Sangster "told [him] to put all [his] time in the markup of the printing and the film prep so [he would] get paid...." ² Wozniak made similar admissions in his answers to interrogatories. ³

On November 24, 1992, four days after Wozniak's deposition, Cooke and the Festival filed a cross-complaint against Sangster and Wozniak alleging causes of action for (1) conspiracy to defraud; (2) negligent misrepresentation; and (3) fraudulent breach of fiduciary duty. The cross-complaint sought damages and declaratory relief on the respective rights and obligations of Sangster, Wozniak, Cooke and the Festival in connection with the preparation of the 1992 Festival program. Among other allegations of fact, all three causes of action in the cross-complaint were based on (1) Cooke's statements to Sangster and Wozniak in early July 1992 informing them that Wozniak's services were not needed in connection with the 1992 Festival program; (2) Cooke's reliance on Sangster's representations about the source and amounts of printing subcontractor bids in connection with preparation of the 1992 program; (3) the subsequent efforts by Sangster and Wozniak to conceal Wozniak's involvement in preparing the 1992 program through undisclosed and excessive markups on subcontractor costs; and (4) Sangster's breach of her fiduciary duty to Cooke in failing to disclose or actively concealing Wozniak's involvement in preparing and printing the 1992 program, including his undisclosed markups. ⁴

After Wozniak and the Festival settled their disputes, the trial court assigned the remainder of the action to judicial arbitration. Each side submitted briefs and documentary evidence and presented sworn testimony. At the conclusion, the arbitrator found in favor of Cooke and the Festival, and awarded them damages against Sangster. Sangster timely filed a request for trial de novo from the arbitration award. After a lengthy jury trial, Sangster prevailed.

On January 6, 1997, Sangster filed the instant lawsuit for malicious prosecution. She alleged that Cooke and the Festival, aided and abetted by the other respondents, maliciously prosecuted the cross-complaint against Sangster on the basis of fabricated evidence and testimony concerning: (a) representations allegedly made by Sangster to Cooke about bids to publish the 1992 program; (b) Cooke's reliance on those representations; and (c) resulting damages. Respondents filed a motion for summary judgment, arguing that: (a) the undisputed facts established probable cause to prosecute the underlying cross-complaint against Sangster and Wozniak; (b) the arbitrator's award in favor of Cooke and the Festival established the existence of probable cause; and (c) Sangster's malicious prosecution action was time-barred as against Cooke. The trial court found that no triable issue of material fact exists that respondents had probable cause to initiate the underlying cross-complaint against Sangster. It granted the motion for summary judgment on that basis, and specifically declined to rely on the arbitrator's decision. Judgment was entered in favor of respondents, and this appeal followed.

II. SUMMARY JUDGMENT STANDARD OF REVIEW

The standard of review of a judgment entered upon the grant of a defense motion for summary judgment is well established. A defendant may move for summary judgment in any action or proceeding by contending that the action has no merit. (CODE CIV. PROC., § 437C⁵, subd. (a).) Section 437c, subdivision (c), requires a trial court to grant summary judgment if all the papers and affidavits submitted, together with "all inferences reasonably deducible from the evidence" and uncontradicted by other inferences or evidence, show that "there is no triable issue as to any material fact and that the moving party is entitled to a judgment as a matter of law...." ⁶ (§ 437c, subd. (c); 6 Witkin, Cal. Procedure (4th ed. 1997) Proceedings Without Trial, § 217, p. 629.) Where the defendant is the moving party, he or she may meet the burden of showing that a cause of action has no merit by proving...