California Court of Appeal Mar 19, 2014 No. D063397Unpublished
Filed 3/19/14 Lilien v. Markle CA4/1 NOT TO BE PUBLISHED IN OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
COURT OF APPAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
ALLISON LOVELL LILIEN, D063397
Plaintiff and Appellant,
v. (Super. Ct. No. 37-2011-00059139- CU-NP-NC) JOHN R. MARKLE,
Defendant and Respondent.
APPEAL from a judgment of the Superior Court of San Diego County, Robert
Dahlquist, Judge. Affirmed.
Bruce Cornblum for Plaintiff and Appellant.
Meador & Engle and Alan Engle for Defendant and Respondent.
Plaintiff and appellant Allison Lovell Lilien (Allison) appeals the order granting
the anti-SLAPP motion brought under Code of Civil Procedure section 425.161 by
1 All statutory references are to the Code of Civil Procedure unless indicated otherwise. Section 425.16 is commonly referred to as the anti-SLAPP statute. (Siam v. Kizilbash (2005) 130 Cal.App.4th 1563, 1568.) SLAPP is an acronym for "'strategic
defendant and respondent John R. Markle after she sued Markle for malicious
prosecution in connection with a $100,000 loan Markle made to Allison's husband,
Duane Lilien (Duane), when Allison and Duane were married. Allison contends she
made a prima facie showing of facts to sustain a favorable judgment, and the trial court
thus erred in granting Markle's anti-SLAPP motion. We disagree and affirm the order
Markle in December 2005 loaned his long-time friend Duane $100,000 (loan).2
Allison and Duane married in 1989 and separated in July 2008. The loan funds were
deposited in a joint account held by Allison and Duane and were used to develop a
lawsuit against public participation.'" (Jarrow Formulas, Inc. v. LaMarche (2003) 31 Cal.4th 728, 732, fn. 1.)
2 Allison contends in her papers filed in this court that there allegedly "exists no evidence in the record" showing the transfer of the $100,000 from Markle to Duane was a loan, as opposed to an "investment." (Italics added.) This contention boarders on the frivolous. Indeed, Allison in her operative complaint repeatedly referred to the $100,000 payment by Markle to Duane in December 2005 as a "loan" and never once referred to the payment as some sort of "investment." (See Myers v. Trendwest Resorts, Inc. (2009) 178 Cal.App.4th 735, 746 [noting that "[j]udicial admissions may be made in a pleading" and noting that "[f]acts established by pleadings as judicial admissions '"are conclusive concessions of the truth of those matters, are effectively removed as issues from the litigation, and may not be contradicted, by the party whose pleadings are used against him or her"'"].) In addition, Allison also referred to this payment as a "loan" in her declaration under penalty of perjury to set aside the default judgment. Duane also stated under penalty of the perjury that the $100,000 was a loan, as did Markle. And, of course, Duane prepared the original note and the new note, the latter which he signed in connection with the settlement of the underlying action, verifying the $100,000 payment was a loan. Finally, as discussed post, the issue of whether the $100,000 payment was a loan or an investment is in any event a red-herring, given that payment constituted a "debt" incurred by Duane while he was married to Allison. 2
property located in Borrego Springs, California, "for which Allison [was] listed as a joint
tenant [(real property)]."
Duane prepared a written promissory note setting out the terms of the loan
(original note). The terms of the original note suggest it was to be signed by Duane and
Allison and was to be secured by the real property. It appears neither Duane nor Allison
signed the note.
In or around July 2008, Markle learned that Allison had filed for divorce from
Duane. In August 2009, Markle, Duane and Allison signed a document titled "Letter of
Intent -- Loan Restructuring and related Property Purchase" (LOI). Paragraph 16 of the
LOI provided that as a "condition to consummation of the [proposed real estate purchase
and sale agreement for the property] contemplated by this LOI[,] and further as a
condition the closing of any escrow associated therewith, the Buyer [i.e., Markle] and
Seller Duane Lilien only shall enter into, and concurrently close escrow for, a
restructuring of the present indebtedness [i.e., ostensibly the loan] owing by Seller to
Buyer" on certain terms and conditions provided in the LOI. The LOI defined the term
"Seller" to include Duane and Allison. The proposed real estate purchase and sale
agreement was never consummated, however. As such, the LOI by its own terms
expired.
B. The Underlying Action
Markle in December 2009 sued Allison and Duane. Markle asserted causes of
action against Allison and Duane for breach of contract and common counts and sought
an order compelling them "to make, execute and deliver a new promissory note to
plaintiff . . . as a replacement for the destroyed original note" (Markle v. Lilien (Super.
3
Ct. San Diego County, 2011, No. 37-2009-00062733-CU-CL-NC); the underlying
action). Markle in his complaint alleged that Allison and Duane in December 2005
"executed and delivered" to him the original note in the amount of $100,000, the "terms
and conditions" of which were shown in the unsigned note attached as exhibit 1 to the
complaint. Markle further alleged that the original note "was lost or misplaced, possibly
as a result of a fire which destroyed plaintiff's home, and is no longer in existence" and
that Markle was prepared "to give an indemnity bond to defendants pursuant to Section
3415 of the Civil Code with sureties approved by the court at the court's direction to
indemnify against loss, damage, expense, or other liability which may be suffered by
defendants by reason of the issuance of the duplicate promissory note." Markle sought
the return of his $100,000 plus interest.
Because Allison did not make an appearance in the underlying action and service
of the summons and complaint was initially deemed satisfactory, a default was entered
against her in March 2010.
In September 2010, Markle and Duane attended a civil collections mandatory
settlement conference and reached a settlement of the underlying action with respect to
Duane only (settlement agreement). Under the terms of the arms-length settlement
agreement, Duane agreed to pay Markle $110,000, executed a new promissory note (new
note) and agreed to make minimum monthly payments of $100 beginning in March 2011
for 30 months, at which time the outstanding balance would be due and payable in a final
balloon payment.
The settlement agreement also provided that any amounts Markle collected from
Allison would offset the amount Duane owed under the new note and, by the same logic,
4
that any payments made by Duane under the new note would offset any amounts Allison
would owe under any judgment. In addition, if Duane made all payments as provided
under the settlement agreement, Markle agreed to "file a request for dismissal of [the
underlying action] with prejudice in connection with the request for default judgment
against Allison Lillien [sic]." As a result of the settlement agreement, Markle dismissed
Duane without prejudice from the underlying action.
Markle in early November 2010 filed an application for default judgment against
Allison. In connection with that application, Markle submitted a declaration under
penalty of perjury stating that he had loaned $100,000 to "the defendants," as evidenced
by a cashier's check dated December 14, 2005, made payable to Duane in the amount of
$100,000; that the original note had been lost; that, under the terms of the original note,
Markle was entitled to seek security for the note either on default or demand; that Markle
did not seek security for the note; and that Markle hereby "waives any right to security or
to a security interest provided for by the [original] [n]ote." Markle sought a judgment in
the amount of $109,175.65 against Allison based on the $100,000 loan—with interest
accruing not from the date of the loan but from the date Markle filed his complaint
(December 2009) through November 15, 2010 at the daily rate of $27.39 (prejudgment
interest at legal rate of 10 percent)—and costs. Judgment was entered against Allison in
mid-November 2010 in the amount of $112,480.65. However, at no time did Markle
seek to execute on the judgment against Allison.
Allison in May 2011 first appeared in the underlying action and filed a motion to
set aside the default judgment. Allison alleged she had not been personally served with
the summons and complaint and thus lacked knowledge of the underlying action until late
5
February 2011, when she learned from Duane in connection with a mandatory settlement
conference in their divorce proceedings that judgment in the underlying action had been
entered against her.
In her declaration in support of her motion brought pursuant to Code of Civil
Procedure section 473.5 to set aside the default judgment, Allison stated she "never"
(emphasis in original omitted) signed the unsigned original note and she "knew nothing
about this 'loan,' and as stated previously only found out about the existence of this
lawsuit during a mandatory settlement conference" in late February 2011, where, she
alleged, Duane "strategically waited until the end of a four (4) hour settlement conference
to reveal this, knowing that Allison was kept in [t]he dark about the existence of this
lawsuit from the outset."
Allison in her declaration further alleged that she did not own the business where
she was allegedly personally served; that she was never personally served and, instead,
that she was "merely a treating physician" at the business; and that, in any event, she
practiced medicine using her maiden name "Dr. Lovell" and perhaps that is why she
never received the summons and complaint. The trial court in early September 2011
tentatively granted Allison's motion to set aside Markle's default judgment, finding she
made a sufficient showing that she did not receive actual notice of the summons and
complaint and that her lack of such notice was not the result of her avoiding service or
inexcusable neglect.
The day after the trial court issued its tentative ruling granting Allison's motion to
set aside the default judgment, Markle dismissed Allison without prejudice from the
underlying action. Markle in his declaration in support of his anti-SLAPP motion stated
6
under penalty of perjury that his decision to dismiss Allison "had nothing to do with the
merits" of the underlying action; that he dismissed the underlying action against Allison
because of the settlement agreement reached with Duane; that the "case against Allison
had dragged on for nearly two years and seemed no closer to resolution once the default
had been set aside"; and that he "had already spent significantly more on legal fees than
[he] had expected and believed, based on the ongoing divorce proceeding, that Allison
Lilien would vigorously litigate the case even if doing so were not economically
justified." Markle also stated the only reason he filed the underlying action against
Allison was to have the loan repaid.
Allison in response/retaliation sued Markle and Duane. In her original complaint,
Allison asserted causes of action against Markle for malicious prosecution, based on his
dismissal of the underlying action against her, and for conspiracy to inflict emotional
distress. After the court sustained Markle's demurrer to the conspiracy cause of action,
Allison in July 2012 filed the 23-page operative complaint, asserting against Markle a
single claim for malicious prosecution.3
In her operative complaint, Allison generally alleged that Duane and Markle for
the last 30 years have been "close personal and business friends"; that Markle has assisted
Duane "financially over these 30 years"; that she and Duane separated in early July 2008;
3 As noted ante, Allison's operative complaint also asserted various causes of action against Duane—who is not a party in this appeal—including for breach of fiduciary duty based on Allison's contention that she was involved in "'marital proceedings made in hell'" as a result of Duane's "frivolous and fictitious claims" against her; Allison's attempts to "uncover the existence and extent of community property holdings" solely under Duane's control; and his attempts to saddle Allison with "numerous loans and debts not previously known" by Allison that Duane contends must be paid out of "community equity in the community property of the parties," including the loan made by Markle. 7
that during her marriage with Duane he "experienced a history of failed business
endeavors"; that she was "never involved" in Duane's business endeavors and that he, in
any event, "kept his business dealings . . . away from [her]"; that Duane contends the loan
made by Markle was and is a community debt; and that Markle unlawfully sued her after
Markle and Duane "collu[ded]" to use Markle's lawsuit as "leverage to force" her to repay
the 2005 loan with income she earned after she and Duane had separated.
Allison further alleged that Markle brought the underlying action against her "for
the sole purpose of forcing [her] to involuntarily give real property security" for the
original promissory note "knowing [she] had no legal obligation" in connection with that
note. She also alleged Markle knew the default judgment he obtained against her was a
"sham," and he did not have "an honest suspicion or belief" in his declaration in support
of the application for default judgment that Allison was personally liable for repayment
of the loan.
Allison alleged that if the underlying action had been successful, Markle not only
would benefit from obtaining a personal judgment against her "but also would be
performing an act of friendship for his close friend Defendant Duane by aiding Duane in
forcing Allison to pay Duane's personal obligation owing to Markle." Allison prayed for
damages in excess of $100,000 and sought an award of punitive damages of $500,000
against Markle.
Markle in response filed an anti-SLAPP motion to strike Allison's malicious
prosecution action. The trial court granted that motion, ruling as follows:
"The sole cause of action asserted against defendant Markle in the [operative]
complaint is for malicious prosecution. An action for malicious prosecution based on a
8
party's or attorney's statements or writings in an earlier judicial proceeding is subject to
being stricken as a SLAPP suit: '[B]y its terms, section 425.16 potentially may apply to
every malicious prosecution action, because every such action arises from an underlying
lawsuit, or petition to the judicial branch.' Jarrow Forumlas, Inc. v. LaMarche (2003) 31
Cal.4th 728, 735; Dickens v. Provident Life & Acc. Ins. Co. (2004) 117 Cal.App.4th 705,
713. Malicious prosecution plaintiffs must be prepared to show at the outset a probability
of prevailing—i.e., that the earlier suit was filed 'maliciously' and 'without probable
cause.' This does not 'unduly burden plaintiffs' access to court.' Jarrow Formulas, Inc. v.
LaMarche, supra, 31 Cal.4th at 740.
"In order to show the probability of success on her malicious prosecution claim,
plaintiff must show a legally sufficient claim and that the claim is supported by
competent, admissible evidence. DuPont Merck Pharmaceutical Co. v. Superior Court
(2000) 78 Cal.App.4th 562, 568. The 'probability of prevailing' is tested by the same
standard governing a motion for summary judgment. That is, in opposing a SLAPP
motion, it is the plaintiffs' burden to make a prima facie showing of facts that would
support a judgment in the plaintiffs' favor. Kyle v. Carmon (1999) 71 Cal.App.4th 901,
907. The court will consider the pleadings and evidentiary submissions of both the
plaintiff and the defendant, but the court does not weigh credibility or comparative
strength of the evidence; the court considers the defendant's evidence only to determine if
it defeats the plaintiff's showing as a matter of law. Kashian v. Harriman (2002) 98
Cal.App.4th 892, 906.
"A plaintiff in a malicious prosecution action 'must plead and prove that the prior
action (1) was commenced by or at the direction of the defendant and was pursued to a
9
legal termination in his, plaintiff's, favor [citations]; (2) was brought without probable
cause [citations]; and (3) was initiated with malice [citations].' Bertero v. National
General Corp. (1974) 13 Cal.3d 43, 50; see Cote v. Henderson (1990) 218 Cal.App.3d
796. Unlike the malice element, which is a factual question, the issue of whether there
was an absence of probable cause in bringing the prior case is a question of law to be
determined by the court. Paiva v. Nichols (2008) 168 Cal.App.4th 1007, 1018.
"As to (1), Markle brought a prior action against the plaintiff and later dismissed
that action following an order setting aside the default of the plaintiff. 'Voluntary
dismissal is presumed to be a favorable termination on the merits, unless otherwise
proved to a jury. (Citations omitted[.]) This is because "[a] dismissal for failure to
prosecute . . . does reflect on the merits of the action [and in favor of the defendant]. . . .
The reflection arises from the natural assumption that one does not simply abandon a
meritorious action once instituted."' Sycamore Ridge Apartments, LLC v. Naumann
(2007) 157 Cal.App.4th 1385, 1400.
"Markle testifies that he dismissed the prior action because 'he decided that his
time and money could be spent on activities more rewarding than litigation.' See Markle
Decl., ¶ 11. However, there is no case that holds that financial considerations should be
analyzed in determining whether a dismissal of the underlying action constitutes a
favorable determination. Thus, Markle's declaration cannot establish, as a matter of law,
that plaintiff would be unable to establish the element of favorable termination.
Drummond v. Desmarais (2009) 176 Cal.App.4th 439, 457.
"As to (2), the presence or absence of probable cause is viewed under an objective
standard applied to the facts upon which the defendant acted in prosecuting the prior
10
case. Sheldon Appel v. Albert & Oliker (1989) 47 Cal.3d 863, 878, 881. The test of
determining probable cause is whether any reasonable attorney would have thought the
claim to be tenable. Id. at 886.
"Hence, 'probable cause to bring an action does not depend upon it being
meritorious, as such, but upon it being arguably tenable, i.e., not so completely lacking in
apparent merit that no reasonable attorney would have thought the claim tenable.
[Citation.] Counsel and their clients have a right to present issues that are arguably
correct, even if it is extremely unlikely that they will win. . . .[] [Citation.]' [Citations.]
Probable cause is established by showing that the 'claim . . . is legally sufficient and can
be substantiated by competent evidence. . . . ' Paiva v. Nichols[, supra,] 168 Cal.App.4th
[at pp.] 1019-20.
"The Court has considered both parties' arguments regarding whether Markle had
probable cause to bring the underlying action and concludes that the claim against
Allison for recovery of the alleged loan is an arguably tenable claim. In particular, even
assuming that the loan was made to Duane only and Markle never obtained a promise by
Allison to re-pay the loan, Markle's claims against Allison to recover under community
property or agency principles from Allison is legally tenable.
"As to (3), the Court is not persuaded that plaintiff has presented admissible
evidence establishing that the prior action was filed maliciously. To constitute malice
there must be an improper motive or purpose. Masterson v. Pig'n Whistle Corp., 161
Cal.App.2d 323, 338. 'Malice' is demonstrated by evidence which establishes bad faith,
or the absence of an honest and sincere belief that the prosecution was justified by the
existent facts and circumstances. Singleton v. Singleton, 68 Cal.App.2d 681, 696; Grove
11
v. Purity Stores, Ltd., 153 Cal.App.2d 234, 241. Plaintiff's evidence does not establish a
prima facie case of malice."
DISCUSSION
A. Guiding Principles of the Anti-SLAPP Statute
Under section 425.16, subdivision (b)(1), a "cause of action against a person
arising from any act of that person in furtherance of the person's right of petition or free
speech under the United States Constitution or the California Constitution in connection
with a public issue shall be subject to a motion to strike, unless the court determines that
the plaintiff has established that there is a probability that the plaintiff will prevail on the
claim."
In the instant case, the parties recognize that a malicious prosecution claim is
subject to the anti-SLAPP statute. (See Jarrow Formulas, Inc. v. LaMarche, supra, 31
Cal.4th at pp. 736-741; Kleveland v. Siegel & Wolensky, LLP (2013) 215 Cal.App.4th
534, 548-549.) As such, the burden then shifted to Allison to show a likelihood of
prevailing on that claim. (See § 425.16, subd. (b)(1).)
To show the likelihood of prevailing on the merits, Allison "'must demonstrate that
the complaint [was] both legally sufficient and supported by a sufficient prima facie
showing of facts to sustain a favorable judgment if the evidence [she] submitted . . . [was]
credited.' [Citations.]" (See Wilson v. Parker, Covert & Chidester (2002) 28 Cal.4th
811, 821.) "'We consider "the pleadings, and supporting and opposing affidavits . . .
upon which the liability or defense is based." [Citation.] However, we neither "weigh
credibility [nor] compare the weight of the evidence. Rather, [we] accept as true the
evidence favorable to the plaintiff [citation] and evaluate the defendant's evidence only to
12
determine if it has defeated that submitted by the plaintiff as a matter of law." [Citation.]'
[Citations.]" (Nygard, Inc. v. Uusi–Kerttula (2008) 159 Cal.App.4th 1027, 1036.)
In opposing an anti-SLAPP motion, a plaintiff need only establish that the claim
subject to section 425.16 has "minimal merit." (Soukup v. Law Offices of Herbert Hafif
"Malice is usually proved by circumstantial evidence. [Citation.] Although a lack
of probable cause, standing alone, does not support an inference of malice, malice may
still be inferred when a party knowingly brings an action without probable cause.
[Citation.]" (Padres L.P. v. Henderson, supra, 114 Cal.App.4th at p. 522.) Whether
4 Our decision in the instant case is limited solely to the issue whether Allison met her burden to show a probability of prevailing on her malicious prosecution action and, specifically, to establish the lack of probable cause element of this tort action. We thus are not deciding in this proceeding whether and to what extent Allison and/or the community, if at all, are liable to pay the debt on the loan as set forth in the new note executed by Duane.
5 In reaching our decision, we did not consider any of the evidence proffered by Markle in support of his anti-SLAPP motion to which Allison had unsuccessfully objected to in the trial court. 18
malice exists presents a factual question, and its proof may be inferred from all the
circumstances of the case. (Sheldon, supra, 47 Cal.3d at p. 874.)
Here, Allison has not proffered sufficient evidence for purposes of the anti-SLAPP
statute from which a reasonable person could infer an improper motive by Markle in
asserting against her causes of action for breach of contract and common counts in the
underlying action.
First, we reject Allison's contention that Markle brought the underlying action
against her for the "sole purpose" of forcing her to give involuntarily real property
security on the note she did not sign. Instead, the record shows that in November 2010,
before Allison filed her malicious prosecution action against Markle, he already had
agreed (under penalty of perjury) to "waive[] any right to security or to a security interest
provided for by the [original] note" in connection with the prove up of his default
judgment against Allison.
Second, that Markle alleged in the underlying action that the original note had
been lost or misplaced, when it appears neither Duane nor Allison had signed that note,
also does not establish the requisite malice. There is no dispute on this record that
Markle made the loan to Duane, a married person, during Duane's marriage to Allison.
(See Fam. Code, §§ 902 & 903, subd. (a).) In addition, the record shows that Duane
reaffirmed the debt in the new note, after he and Markle signed the settlement agreement
and that Markle agreed, in connection with that settlement, to dismiss Allison from the
underlying action if and when Duane repaid the debt evidenced by the new note.
What's more, the record shows that Allison, in August 2009 and before the
underlying action was filed, knew about the loan from Markle to Duane as generally
19
referenced by the LOI that sought, among other things, to restructure the loan so that it
could be repaid by Duane only in connection with the sale of certain property.
Finally, we conclude Allison's contention that the underlying lawsuit was the
result of some sort of collusion between Duane, on the one hand, and Markle, on the
other, to saddle her with the entire debt from the loan is wholly speculative, is contrary to
the law in any event, and is not supported by admissible evidence in the record. Rather,
the record shows Markle sued on the note after the parties unsuccessfully sought in the
LOI to restructure the debt. In addition, as noted above, Duane signed a new note
reaffirming the debt and agreed to make all payments toward that debt. The record also
shows that even after a default judgment was entered against Allison, Markle did not seek
to execute on that judgment.
For these reasons, we independently conclude Allison also has not shown a
probability of prevailing on the malice element of her malicious prosecution action.
DISPOSITION
The trial court's order granting Markle's special motion to strike Allison's
malicious prosecution claim is affirmed. Markle to recover his costs of appeal.
BENKE, Acting P. J.
WE CONCUR:
AARON, J.
IRION, J.
20
AI Brief
AI-generated · verify before citing
Holding. The court affirmed the order granting the defendant's anti-SLAPP motion, holding that the plaintiff failed to establish a probability of prevailing on her malicious prosecution claim because the underlying action was legally tenable.
Issues
Whether the trial court erred in granting the defendant's anti-SLAPP motion against a malicious prosecution claim.
Whether the defendant had probable cause to initiate the underlying action against the plaintiff for repayment of a loan.
Disposition. Affirmed.
Quotations verified verbatim against the opinion
“The Court has considered both parties' arguments regarding whether Markle had probable cause to bring the underlying action and concludes that the claim against Allison for recovery of the alleged loan is an arguably tenable claim.”
“Plaintiff's evidence does not establish a prima facie case of malice.”