Alston v. Dawe

Filed 7/27/20

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FOURTH APPELLATE DISTRICT

DIVISION THREE

ELAINE B. ALSTON et al.,

Plaintiffs and Appellants, G057157

v. (Super. Ct. No. 30-2018-00997214)

MICHAEL G. DAWE et al., OPINION

Defendants and Respondents.

Appeal from a judgment of dismissal of the Superior Court of Orange
County, Sheila Fell, Judge. Affirmed in part, reversed in part, and remanded.
Copenbarger & Associates, Paul D. Copenbarger and Elaine B. Alston for
Plaintiffs and Appellants.
Prenovost, Normandin, Bergh & Dawe, Michael G. Dawe and Brian D.
Cronin for Defendants and Respondents.
* * *
 A plaintiff suing for malicious prosecution must establish the underlying
action was terminated in her favor. To satisfy this element, if the underlying action was
terminated by means other than trial, the termination must involve a determination on the
merits of the case and specifically the malicious prosecution plaintiff’s innocence of the
alleged misconduct. (Casa Herrera, Inc. v. Beydoun (2004) 32 Cal.4th 336, 341-342
(Casa Herrera).)
The issue presented here is whether a dismissal by the court of the
underlying action on collateral estoppel grounds can qualify as a favorable termination
for purposes of a subsequent malicious prosecution claim. The trial court held it did not.
The court therefore found the plaintiffs could not establish a probability of prevailing on
their malicious prosecution claim, granted the defendants’ special motions to strike the
claim under the anti-SLAPP (strategic lawsuit against public participation) statute, and
dismissed the complaint. In so ruling, the court relied on the only case on point, JSJ
Limited Partnership v. Mehrban (2012) 205 Cal.App.4th 1512, 1527 (JSJ), which held
“the successful invocation of the defense of res judicata in the underlying claim is not a
determination on the merits for purposes of a malicious prosecution action.” (Italics
added.)
As discussed hereafter, we decline to follow the rule articulated in JSJ. A
dismissal on collateral estoppel grounds can occur for a number of reasons, including the
fact that the same issue was already litigated and decided on the merits in an earlier
proceeding. Thus, when ruling on an anti-SLAPP motion attacking a malicious
prosecution claim that arises out of another lawsuit that was dismissed on collateral
estoppel grounds, a trial court should look behind the collateral estoppel ruling in the
prior case to determine what the rationale for that ruling was. If, in that earlier
proceeding, the party’s lack of culpability on the disputed issue was argued, litigated, and
decided on the merits, the dismissal of the subsequent case on collateral estoppel grounds
qualifies as a favorable termination for purposes of a later malicious prosecution claim.

2
 We have seen this convoluted case before. The original dispute focused on
whether an attorney and her law firm could represent a limited liability company (LLC)
in a lease dispute with its tenant, who also happened to be a member and co-owner of the
LLC. The tenant claimed the LLC could not retain counsel or litigate the lease dispute
without his consent because he was a 50 percent co-owner of the LLC. An arbitrator
found the LLC’s retention of counsel and prosecution of the dispute were permissible,
and the trial court confirmed the arbitration award. We affirmed (Case 1). The tenant
then filed an action for declaratory relief against the LLC’s attorneys (Case 2), seeking a
declaration they could not represent the LLC without his consent. The trial court (the
same judge who presided over Case 1) sustained the LLC’s attorneys’ demurrer in Case 2
without leave and granted their anti-SLAPP motion, citing the collateral estoppel effect
of Case 1. The LLC’s attorneys then filed the instant malicious prosecution action
(Case 3) against the tenant and his attorneys, who each filed anti-SLAPP motions.
Relying on JSJ, the trial court (again, the same judge as in Case 1 and Case 2) granted
their anti-SLAPP motions, finding the attorney-plaintiffs could not establish a favorable
termination of Case 2 and thus could not establish a probability of prevailing on their
malicious prosecution claim.
We reverse that portion of the trial court’s order and remand this matter for
1
further proceedings. Whether the attorneys could represent the LLC was litigated at
length and decided on the merits in Case 1; that is precisely why the attorneys won in
Case 2. The basis for the dismissal on collateral estoppel grounds in Case 2 was not
technical or procedural; it was based on the merits (or lack thereof) of Case 2. The
attorney-plaintiffs therefore established a termination of Case 2 in their favor. On

1
The complaint also included a fraud claim against the tenant, and the trial
court granted the anti-SLAPP motion as to that claim as well. The attorney-plaintiffs do
not challenge that portion of the order, and we therefore affirm it without further
discussion.

3
remand, the trial court should complete its prong two anti-SLAPP analysis and consider
whether the attorney-plaintiffs established a probability of prevailing on the other
elements of their malicious prosecution claim.

FACTS
The following facts are taken from the complaint, declarations, and other
evidence submitted on the special motions to strike, along with our prior opinions in the
underlying matters. (See Newport Harbor Offices & Marina, LLC v. McNaughton
(Sept. 5, 2014, G047424, G048095) [nonpub. opn.] (NHOM 1); Newport Harbor Offices
& Marina, LLC v. Kent A. McNaughton and Associates (June 29, 2017, G052704,
G052984) [nonpub. opn.] (NHOM 2).)

1. The Parties’ Dispute Concerning Rent and NHOM’s Ability to Hire
Counsel without McNaughton’s Consent
Paul Copenbarger and Kent McNaughton formed Newport Harbor Offices
& Marina, LLC (NHOM) in 2003 to acquire an office building in Newport Beach.
McNaughton and Copenbarger were equal owners and the sole members of NHOM.
In NHOM’s operating agreement, Copenbarger delegated to McNaughton
“management of the day-to-day operations of the commercial real property owned by the
Company,” and McNaughton delegated to Copenbarger “management and handling of all
legal affairs of the Company.” These delegations were “[s]ubject to revocation” by the
delegating members.
McNaughton later leased several office suites in NHOM’s building for his
separate real estate business. McNaughton signed the rental agreement on behalf of both
himself and NHOM.

4
 In early 2008, after learning McNaughton had unilaterally increased his
monthly NHOM management payments to himself from $10,000 to $15,000,
Copenbarger revoked McNaughton’s delegated authority to manage NHOM’s day-to-day
operations. In response, McNaughton stopped paying rent to NHOM.

2. Case 1: Litigation Over the Lease Dispute and NHOM’s Ability to Hire
Alston as Counsel
NHOM hired attorney Elaine Alston (Ms. Alston) and her firm, Alston,
Alston & Diebold (collectively, Alston), to file unlawful detainer actions against
McNaughton. McNaughton, through his counsel, advised Alston that their purported
engagement agreement with NHOM was ‘“illegal and ineffective.”’ Undeterred, Alston
continued to represent NHOM in the unlawful detainer actions.
McNaughton then initiated an arbitration against Copenbarger in
accordance with the arbitration provision in NHOM’s operating agreement. He sought a
declaration that NHOM could not validly pursue the unlawful detainer actions against
him without his express consent, Copenbarger could not unilaterally authorize the filing,
and Copenbarger had breached his fiduciary duty by causing NHOM to file the unlawful
detainer actions against McNaughton.
In June 2008, while the unlawful detainer actions and arbitration
(collectively, Case 1) were pending, McNaughton formally revoked Copenbarger’s
delegated right to manage NHOM’s legal affairs. He also filed a motion to compel
arbitration of the lease dispute. In granting the motion, the trial court reasoned the
dispute boiled down to a disagreement between Copenbarger and McNaughton and
would be most efficiently resolved in the pending arbitration. It therefore stayed the
unlawful detainer actions pending the outcome of that arbitration.
The arbitrator issued an interim award in 2011. He found largely in
Copenbarger’s favor, concluding “Copenbarger had the authority to initiate, approve and

5
ratify the legal enforcement actions undertaken by the LLC against McNaughton for
refusal to pay rents for 3 months,” and “Copenbarger had both the duty and responsibility
to initiate and prosecute an action against a delinquent tenant even if that tenant was a
50% member of the LLC.” He further found McNaughton had breached his leases with
NHOM by improperly withholding rent. The arbitrator later issued a final award
incorporating the terms of his interim award without change.
Copenbarger filed a petition to confirm the arbitration award with the trial
court, and McNaughton filed a motion to disqualify Alston. The court denied
McNaughton’s disqualification motion, granted Copenbarger’s petition to confirm the
arbitration award, and confirmed the award in all respects. The court then conducted a
trial on damages, found McNaughton liable to NHOM for $14,283, and entered a
judgment against McNaughton.

3. Our First Opinion in Case 1 (NHOM 1)
McNaughton appealed, asserting NHOM could not pursue litigation against
him without his consent because NHOM is a distinct legal entity of which he owns
50 percent. NHOM cross-appealed, asserting the damages award was too low.
While the cross-appeals were pending, McNaughton filed a motion in this
court to disqualify Alston and dismiss NHOM’s cross-appeal on the grounds that
McNaughton had not consented to Alston representing NHOM. We summarily denied
the motion.
In 2014, we affirmed the judgment against McNaughton, subject to
modifications not relevant here. We concluded “McNaughton’s assertion that the
arbitrator ‘exceeded his jurisdiction’ border[ed] on the specious.” As for Copenbarger’s
ability to pursue litigation on behalf of NHOM against McNaughton without his consent,
we concluded the NHOM operating agreement expressly “delegat[ed] to Copenbarger
exclusive authority to handle NHOM’s ‘legal affairs.’ NHOM’s choice to pursue

6
litigation—against McNaughton or anyone else—falls squarely within that authority and
thus the arbitrator properly concluded Copenbarger had ‘both the duty and responsibility
to initiate and prosecute an action against a delinquent tenant . . . .’” (NHOM 1, supra,
G047424, G048095.)
We went on: “And of course, the fact [Copenbarger’s] delegated authority
over legal affairs was revocable changes nothing, since McNaughton failed to actually
revoke it until after NHOM had already filed the lease dispute. At that point, the
revocation could accomplish nothing more than to ensure that any future changes in
NHOM’s litigation strategy—such as a decision to dismiss or settle the case—would
likely have required the consent of both Copenbarger and McNaughton.” (NHOM 1,
supra, G047424, G048095.)
We also noted the arbitrator impliedly found “Copenbarger had the
authority to approve the selection of counsel to represent NHOM in that dispute,” and
therefore declined to address McNaughton’s contention that “Alston ‘was never
effectively engaged by NHOM.’” (NHOM 1, supra, G047424, G048095.)
McNaughton petitioned for review by the California Supreme Court, but
his petition was denied.
On remand, NHOM moved for an award of attorney fees against
McNaughton under Civil Code section 1717. In denying the motion, the trial court
determined there was no prevailing party for purposes of section 1717 because the
amount awarded to NHOM was much less than it sought. NHOM appealed that order.

4. Case 2: McNaughton’s Action for Declaratory Relief
While NHOM’s appeal of the postjudgment fees order in Case 1 was
pending, McNaughton filed an action seeking declaratory relief against Alston, the
attorneys who had represented NHOM in Case 1 (Case 2). In his original complaint,
McNaughton vaguely alleged Alston was impermissibly representing NHOM “in various

7
[unspecified] litigation matters in which NHOM has putatively taken a position adverse
to McNaughton,” and he sought a declaration that Alston “neither [is], nor ever [was]
legally engaged as counsel for NHOM, and do[es] not, as a matter of law, represent
NHOM, despite their persistent contentions to the contrary.”
McNaughton’s first amended complaint was more detailed. He defined the
“various litigation matters” to include Case 1 and NHOM’s pending appeal of the fees
order. He further alleged he never consented to Alston acting as counsel for NHOM in
Case 1; he formally revoked Copenbarger’s delegated right to manage NHOM’s legal
affairs in June 2008, yet Alston continued to represent and bill NHOM, of which he
owned 50 percent, for their work on Case 1.
McNaughton acknowledged he unsuccessfully challenged Alston’s
authority to bring the unlawful detainer actions in Case 1, but insisted his position was
“[c]onsistent with” this court’s 2014 opinion in NHOM 1, in which we observed
McNaughton’s June 2008 revocation of Copenbarger’s delegated right to manage
NHOM’s legal affairs “could . . . ensure that any future changes in NHOM’s litigation
strategy—such as a decision to dismiss or settle the case—would likely have required the
consent of both Copenbarger and McNaughton.” Selectively citing that sentence in our
2014 opinion, McNaughton alleged Alston was improperly seeking attorney fees for
work that postdated his June 2008 revocation of Copenbarger’s delegated right to manage
NHOM’s legal affairs. He thus sought a declaration that Alston “neither [is], nor ever
[was] legally engaged as counsel for NHOM since June 2008, and do[es] not, as a matter
of law, represent NHOM, despite their persistent contentions to the contrary.” (Italics
added.)
Alston filed a demurrer and special motion to strike the first amended
complaint. The trial court (the same judge who presided over Case 1) sustained the
demurrer without leave to amend and granted the motion to strike on collateral estoppel

8
 2
grounds. In sustaining Alston’s demurrer, the court reasoned, “If the Court of Appeal
wanted to find that [Alston] had no authority for continued representation, it would have
found so in its September 2014 Appellate opinion [in Case 1]; [McNaughton] is
re-litigating this same issue—he is contending the representation is continuing in the
same underlying [case].”
The court also granted Alston’s anti-SLAPP motion, reasoning: “[The]
Court of Appeal ruled that [Alston] had a right to represent NOHM in the underlying
case; [t]he continuation of litigation in the underlying case, is not alleged to be a changed
strategy, but rather a continuation of the already condoned legal representation and
validation of court orders during that litigation; [and McNaughton] has not shown a
probability of prevailing on the merits.”
The trial court entered a judgment for Alston. McNaughton did not appeal.

5. Our Second Opinion in Case 1 (NHOM 2)
Three weeks later, we issued our opinion in NHOM’s appeal from the
postjudgment order denying NHOM’s motion for attorney fees in Case 1. Finding no
abuse of discretion, we affirmed the order. (NHOM 2, supra, G052704, G052984.)
We then explained at length how misleading and ingenuous McNaughton’s
arguments were in NHOM 2 and expressed frustration with McNaughton’s attempts to
relitigate the issue of NHOM’s ability to retain counsel. We noted “the bulk of

2
Collateral estoppel, sometimes called issue preclusion, “prohibits the
relitigation of issues argued and decided in a previous case, even if the second suit raises
different causes of action. [Citation.] Under issue preclusion, the prior judgment
conclusively resolves an issue actually litigated and determined in the first action.
[Citation.] There is a limit to the reach of issue preclusion, however. In accordance with
due process, it can be asserted only against a party to the first lawsuit, or one in privity
with a party.” (DKN Holdings LLC v. Faerber (2015) 61 Cal.4th 813, 824 (DKN).) The
doctrine “applies (1) after final adjudication (2) of an identical issue (3) actually litigated
and necessarily decided in the first suit and (4) asserted against one who was a party in
the first suit or one in privity with that party.” (Id. at p. 825.)

9
McNaughton’s 47-page brief [was] devoted to rehashing his contention that because he is
a 50 percent owner of NHOM, its counsel could not have been authorized to represent it,
or to pursue any litigation against him, absent his own consent. Although this contention
was squarely rejected by the arbitrator, and the rejection was expressly endorsed by this
court in the prior appeal, McNaughton persists—going so far as to selectively quote from
our prior opinion in an effort to persuade us it supports the opposite conclusion from the
one we reached. He does this while simultaneously excoriating NHOM’s counsel for her
supposedly questionable ethics and integrity, and lamenting the enormous waste of
resources this ‘sorry saga’ has occasioned. [¶] McNaughton’s effort accomplishes
nothing more than to inspire some regret we must affirm the court’s order denying
NHOM its requested fees.” (NHOM 2, supra, G052704, G052984.)
We also criticized McNaughton’s attempts to misconstrue our holding in
NHOM 1: “[In NHOM 1, we] point[ed] out if McNaughton had validly revoked
Copenbarger’s delegated authority over NHOM’s legal affairs following its initiation of
the lease dispute against him, revocation would ‘change[ ] nothing.’ [Citation.] Instead,
we said such a ‘revocation could accomplish nothing more than to ensure that any future
changes in NHOM’s litigation strategy—such as a decision to dismiss or settle the case—
would likely have required the consent of both Copenbarger and McNaughton.’
[Citation.] Our point was even if McNaughton had regained the right to participate in
future decisions concerning NHOM’s pursuit of litigation—an issue we did not
specifically address—that would still not have empowered him to upset the status quo in
an ongoing case. It would only be future changes in litigation strategy, such as a
decision to dismiss or settle such a case, that McNaughton might claim a right to
participate in. In no way did we suggest that by rescinding Copenbarger’s sole authority
over litigation, McNaughton could deny NHOM authority to continue on the course it
had already set, which in this case was to pursue the lease dispute against him.”
(NHOM 2, supra, G052704, G052984, italics added.)

10
 We continued, “Unfortunately, McNaughton was likewise undaunted by
our opinion. Rather than acknowledge what we said, he attempted to suggest it meant the
opposite of what we intended—i.e., once he had rescinded his delegation of litigation
authority over NHOM to Copenbarger, he could thereafter unilaterally ‘disapprove[ ] any
[further] litigation conduct by NHOM under the putative representation of [it’s [sic]
counsel].’ Indeed, McNaughton went so far as to selectively quote language from our
opinion back to us in his current respondent’s brief, claiming we had previously
concluded once he rescinded his prior delegation of authority to Copenbarger, ‘all
subsequent “litigation strategy”’ in NHOM’s case against him would likely have required
his consent. Not that ‘changes in NHOM’s litigation strategy—such as a decision to
dismiss or settle the case,’ might require his consent, which is what we said, but that all
strategy would. [¶] And having misrepresented what we said, McNaughton then asserted
our supposed conclusion ‘qualifies as ‘law of the case’ which retroactively voided all the
work done by NHOM’s counsel in this case since June 2008—thus precluding counsel’s
recovery of any fees for those years of work. This assertion is disingenuous and
specious.” (NHOM 2, supra, G052704, G052984.)
We further noted McNaughton’s attempts to “undermine the authority of
NHOM’s counsel to continue pursuing this litigation against him” were “unreasonably
zealous.” (NHOM 2, supra, G052704, G052984.) In the end, however, “given NHOM’s
limited success in achieving its objectives in the lease dispute,” we affirmed the trial
court’s order denying NHOM’s fees motion, finding no abuse of discretion. (Ibid.)

6. Case 3: Alston’s Malicious Prosecution Action
One year later, Alston filed the instant action against McNaughton and his
attorneys in Case 2, Michael G. Dawe and Prenovost, Normandin, Bergh & Dawe
(collectively, Prenovost), asserting claims for malicious prosecution based on Case 2 and

11
 3
fraud. Alston’s complaint detailed various evidence of McNaughton’s and Prenovost’s
alleged acts of malice against Alston, including making numerous disparaging remarks
about Ms. Alston over the years, calling her a ‘“rogue’ attorney” in numerous filings and
hearings, expressing pleasure over the fact Alston had not been paid for most of the work
for NHOM, and submitting a complaint about Ms. Alston to the California State Bar.
According to Ms. Alston, McNaughton and Prenovost’s prosecution of Case 2 damaged
her reputation, bankrupted her and her firm, forced them to incur attorney fees in
defending themselves, caused emotional distress and anxiety, created a conflict between
her and her firm, increased their cost of insurance, and caused difficulty in obtaining
financing.
McNaughton and Prenovost each filed anti-SLAPP motions. Among other
arguments, they asserted Alston could not establish a probability of prevailing on their
malicious prosecution claim because the trial court’s ruling in Case 2 was based on
collateral estoppel grounds, thus barring Alston from establishing the element of a
favorable termination of the underlying action. They both relied on JSJ, supra,
205 Cal.App.4th at p. 1527, which held “the successful invocation of the defense of
res judicata in the underlying claim is not a determination on the merits for purposes of a
malicious prosecution action.”
The trial court (again the same judge as in the prior cases) issued a tentative
ruling granting the anti-SLAPP motions. On the malicious prosecution claim, evidently
relying on the JSJ case, the court reasoned: “Alston cannot show favorable termination
of the underlying action [Case 2]; [t]his Court clearly ruled on the basis of the Court of
Appeal’s decision in the prior action [Case 1]—the basis of this ruling [in Case 2] was

3
The fraud claim named only McNaughton as a defendant and alleged
McNaughton misrepresented in Case 1 that he was a managing member of NHOM and
held a 50 percent ownership interest in NHOM, when in fact he allegedly transferred his
interest in NHOM to a third party.

12
collateral estoppel.” The court did not address Alston’s probability of succeeding on the
4
other elements of their malicious prosecution claim.
Following oral argument, the trial court adopted its tentative ruling without
change and granted the anti-SLAPP motions. It then entered a judgment of dismissal in
favor of McNaughton and Prenovost. Alston appealed.

DISCUSSION

1. The Anti-SLAPP Statute
The Legislature enacted the anti-SLAPP statute to address “what are
commonly known as SLAPP suits (strategic lawsuits against public participation)—
litigation of a harassing nature, brought to challenge the exercise of protected free speech
rights.” (Fahlen v. Sutter Central Valley Hospitals (2014) 58 Cal.4th 655, 665, fn. 3.)
The statute authorizes a special motion to strike meritless claims early in the litigation if
the claims “aris[e] 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.” (Code Civ. Proc., § 425.16, subd. (b)(1).)
When evaluating a special motion to strike, the trial court must engage in a
two-step process. “First, the court decides whether the defendant has made a threshold
showing that the challenged cause of action is one arising from protected activity. . . . If
the court finds such a showing has been made, it then determines whether the plaintiff has
demonstrated a probability of prevailing on the claim.” (Equilon Enterprises v.
Consumer Cause, Inc. (2002) 29 Cal.4th 53, 67.) “Only a cause of action that satisfies

4
The trial court also granted McNaughton’s anti-SLAPP motion as to the
fraud cause of action. In its tentative, the court explained the claim was “based on
statements made in and in connection with the underlying litigation; [t]he statements are
both protected and privileged; [and Alston] cannot show a probability of prevailing on
the merits.”

13
both prongs of the anti-SLAPP statute—i.e., that arises from protected speech or
petitioning and lacks even minimal merit—is a SLAPP, subject to being stricken under
the statute.” (Navellier v. Sletten (2002) 29 Cal.4th 82, 89.) We review a trial court’s
order denying an anti-SLAPP motion de novo. (Flatley v. Mauro (2006) 39 Cal.4th 299,
325.)

2. Step One: Protected Activity
Step one of the anti-SLAPP analysis requires us to decide whether Alston’s
challenged malicious prosecution claim arose from an act in furtherance of
McNaughton’s and Prenovost’s right of petition or free speech. (Code Civ. Proc.,
§ 425.16, subd. (b)(1); see id., subd. (e) [defining protected activity].) Alston concedes
the filing and prosecution of Case 2 qualifies as protected activity, and rightly so.
“[E]very Court of Appeal that has addressed the question has concluded that malicious
prosecution causes of action fall within the purview of the anti-SLAPP statute.” (Jarrow
Formulas, Inc. v. LaMarche (2003) 31 Cal.4th 728, 735.)

3. Step Two: Probability of Prevailing
We therefore turn to step two of the anti-SLAPP analysis, in which Alston
must demonstrate a probability of prevailing on the malicious prosecution claim. “‘[T]he
plaintiff’s burden of establishing a probability of prevailing is not high: We do not weigh
credibility, nor do we evaluate the weight of the evidence. Instead, we accept as true all
evidence favorable to the plaintiff and assess the defendant’s evidence only to determine
if it defeats the plaintiff’s submission as a matter of law. [Citation.] Only a cause of
action that lacks “even minimal merit” constitutes a SLAPP. [Citation.]’ [Citation.] ‘Put
another way, the plaintiff “must demonstrate that the complaint is both legally sufficient
and supported by a sufficient prima facie showing of facts to sustain a favorable
judgment if the evidence submitted by the plaintiff is credited.”’” (Greene v. Bank of
America (2013) 216 Cal.App.4th 454, 458, fn. omitted.)

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 The sole cause of action at issue in this appeal is Alston’s malicious
prosecution claim. “To prevail on a malicious prosecution claim, the plaintiff must show
that the prior action (1) was commenced by or at the direction of the defendant and was
pursued to a legal termination favorable to the plaintiff; (2) was brought without
probable cause; and (3) was initiated with malice.” (Soukup v. Law Offices of Herbert
Hafif (2006) 39 Cal.4th 260, 292, italics added.) As noted, the trial court’s ruling hinged
on the first element—a termination of Case 2 in Alston’s favor.
A. The Favorable Termination Element
Our Supreme Court has summarized the favorable termination element as
follows: “‘[i]t is hornbook law that the plaintiff in a malicious prosecution action must
plead and prove that the prior judicial proceeding of which he complains terminated in
his favor.’” (Casa Herrera, supra, 32 Cal.4th at p. 341.) “‘The theory underlying the
requirement of favorable termination is that it tends to indicate the innocence of the
accused’” in the underlying action. (Ibid.)
“To determine ‘whether there was a favorable termination,’ we ‘look at the
judgment as a whole in the prior action . . . .’ [Citation.] ‘It is not essential to
maintenance of an action for malicious prosecution that the prior proceeding was
favorably terminated following trial on the merits.’ [Citation.] Rather, ‘[i]n order for the
termination of a lawsuit to be considered favorable to the malicious prosecution plaintiff,
the termination must reflect the merits of the action and the plaintiff’s innocence of the
misconduct alleged in the lawsuit.’” (Casa Herrera, supra, 32 Cal.4th at pp. 341-342,
italics added.)
“For example, a termination is favorable for malicious prosecution
purposes where the court in the underlying action: (1) granted summary judgment and
issued sanctions because the claim was meritless [citation]; (2) granted summary
judgment because there was insufficient evidence to establish a triable issue of fact
[citation]; or (3) held that the defendant, as a matter of law, violated no duty to the

15
plaintiff [citation].” (Casa Herrera, supra, 32 Cal.4th at p. 342.) Similarly, “[a]
voluntary dismissal is presumed to be a favorable termination on the merits unless proved
otherwise to a jury because the natural assumption is that one does not simply abandon a
meritorious action.” (Olivares v. Pineda (2019) 40 Cal.App.5th 343, 354 (Olivares).)
On the other hand, ‘“[i]f the termination does not relate to the merits—
reflecting on neither innocence of nor responsibility for the alleged misconduct—the
termination is not favorable in the sense it would support a subsequent action for
malicious prosecution.’ [Citation.] Thus, a ‘technical or procedural [termination] as
distinguished from a substantive termination’ is not favorable for purposes of a malicious
prosecution claim. [Citation.] Examples include dismissals (1) on statute of limitations
grounds [citations]; (2) pursuant to a settlement [citation]; or (3) on the grounds of laches
[citation].” (Casa Herrera, supra, 32 Cal.4th at p. 342; see also Warren v. Wasserman,
Comden & Casselman (1990) 220 Cal.App.3d 1297, 1302 (Warren) [“Termination of a
prior action by a successful statute of limitations defense is not a favorable termination
since it does not reflect on the merits of the prior action”].) Other examples of technical
or procedural terminations that would not support a malicious prosecution claim include
dismissals “(1) for lack of jurisdiction [citation]; (2) for being moot [citation]; (3) for lack
of standing [citation]; (4) for being premature [citation]; and (5) for avoiding litigation
expenses [citation].” (JSJ, supra, 205 Cal.App.4th at p. 1525.) In all these examples, the
terminations are wholly unrelated to the defendant’s innocence or guilt for the alleged
misconduct.
B. A Dismissal on Collateral Estoppel Grounds May Qualify as a
Favorable Termination
We must decide whether a termination of the underlying action on
collateral estoppel grounds qualifies as a favorable termination for purposes of a
subsequent malicious prosecution claim. The California Supreme Court has never

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 5
addressed the issue, and the only published appellate opinion on point is JSJ, which held
“the successful invocation of the defense of res judicata in the underlying claim is not a
determination on the merits for purposes of a malicious prosecution action” because res
judicata is a procedural defense. (JSJ, supra, 205 Cal.App.4th at p. 1527.) Although the
trial court was bound to follow JSJ, the case is not binding on us. (See In re Marriage of
Shaban (2001) 88 Cal.App.4th 398, 409 [“intermediate appellate court precedent that
might otherwise be binding on a trial court [citation] is not absolutely binding on a
different panel of the appellate court”].)
Looking at the issue de novo, we conclude a termination of the underlying
action on collateral estoppel grounds may or may not qualify as a favorable termination
on the merits. It depends on what happened in the original case on which the collateral
estoppel defense was based. If that earlier case involved a determination on the merits of
a particular issue, and if the party’s culpability on that issue was argued, litigated, and
decided in that earlier case, then the termination of the second case on collateral estoppel
grounds is reflective of the merits of that case and qualifies as a favorable termination for
purposes of a later malicious prosecution claim.
Collateral estoppel does not always reflect a finding on the merits or a
determination of guilt or innocence, however. An earlier ruling sometimes has a
collateral estoppel effect even though it is purely technical or procedural in nature. For
example, California “accords collateral estoppel effect to default judgments, at least
where the judgment contains an express finding on the allegations.” (Gottlieb v. Kest
(2006) 141 Cal.App.4th 110, 149.) Similarly, “a stipulated judgment may properly be

5
McNaughton and Prenovost argue Dalany v. American Pacific Holding
Corp. (1996) 42 Cal.App.4th 822, 829 (Dalany) is also directly on point. We disagree.
Dalany held a settlement and stipulated judgment in an underlying action do not
constitute a favorable termination to support a subsequent malicious prosecution claim; it
did not involve a dismissal on res judicata or collateral estoppel grounds.

17
given collateral estoppel effect, at least when the parties manifest an intent to be
collaterally bound by its terms.” (California State Auto. Assn. Inter-Ins. Bureau v.
Superior Court (1990) 50 Cal.3d 658, 664.) Of course, a default judgment or a stipulated
judgment is not necessarily indicative of a party’s culpability on a given issue.
Thus, in evaluating whether a termination of the underlying action on
collateral estoppel grounds qualifies as a favorable termination to support a malicious
prosecution claim, courts must look behind the collateral estoppel dismissal, evaluate
what happened in the original case that formed the basis for the collateral estoppel ruling,
and determine whether the party’s culpability on that issue was argued, litigated, and
decided on the merits in that earlier case. If it was, the dismissal of the second action on
collateral estoppel grounds qualifies as a favorable termination for purposes of a later
malicious prosecution claim. If, on the other hand, the first judgment was not based on
the actual merits of that case but nevertheless had a collateral estoppel effect (e.g., if the
first case ended via stipulated judgment, default judgment, or for other technical or
procedural reasons), the dismissal of the second action on collateral estoppel grounds
presumably would not qualify as a favorable termination in a later malicious prosecution
claim because the original judgment was not a determination of the merits.
C. Disapproval of JSJ
We recognize the test we articulate above runs contrary to JSJ, which held
“the successful invocation of the defense of res judicata in the underlying claim is not a
determination on the merits for purposes of a malicious prosecution action.” (JSJ, supra,
205 Cal.App.4th at p. 1527, italics added.) We do not find JSJ’s analysis persuasive.
The relevant facts of JSJ were as follows. Alfredo Garcia was a disabled
restaurant patron who sued JSJ, a commercial landlord, for violations of Civil Code
sections 54 and 54.1 based on Garcia’s alleged inability to use the property’s restrooms.
Following a court trial, the trial court entered judgment for JSJ. (JSJ, supra, 205
Cal.App.4th at pp. 1516-1517.) A year later, Garcia filed a second action against JSJ

18
alleging violations of Civil Code sections 51, 54, and 54.1 based on the configuration of
JSJ’s parking lot. The trial court sustained JSJ’s demurrer with leave to amend on res
judicata grounds, but rather than amending his complaint, Garcia dismissed the action
without prejudice. (Id. at pp. 1517-1518.) JSJ then sued Garcia and his attorney for
malicious prosecution. Garcia’s attorney filed an anti-SLAPP motion; the trial court
denied the motion, and the attorney appealed. (Id. at pp. 1518-1519.)
The appellate court reversed, finding the attorney’s anti-SLAPP motion
should have been granted. The court began by observing the question of “[w]hether a
ruling that a claim barred by the doctrine of res judicata and dismissed based on that
ruling results in a favorable termination for a malicious prosecution action is not an easy
issue. It might seem that the disposal of a claim by the doctrine of preclusion has been
favorably terminated.” (JSJ, supra, 205 Cal.App.4th at p. 1525.) Ultimately, however,
the court concluded res judicata is necessarily a procedural defense, likening res judicata
to a statute of limitations defense, and thus not reflective of a case’s merits. (See id. at
pp. 1525-1527, citing Warren, supra, 220 Cal.App.3d at p. 1303 for notion that a
resolution based on the statute of limitations “does not constitute a favorable termination
because it does not reflect on the merits of the action.”)
The JSJ court reasoned: “Res judicata, as the statute of limitations, is a
defense that does not go to the substantive merits of the claim. Neither is it a
determination of the actual ‘innocence’ of a party.” (JSJ, supra, 205 Cal.App.4th at
p. 1525.) It is “not concerned with the actual merits of a prior adjudication but solely
with the need for finality.” (Id. at pp. 1525-1256.) “[T]he doctrine is an affirmative
defense, which as a matter of procedure, bars the claim—just as the statute of limitations
does—whether the claim is meritorious or not.” (Id. at p. 1526.) Thus, “the successful
invocation of the defense of res judicata in the underlying claim is not a determination on
the merits for purposes of a malicious prosecution action.” (Id. at p. 1527.) If JSJ
wanted to pursue a malicious prosecution action against Garcia, concluded the court, it

19
should have “‘eschew[ed] the procedural defense, forgo[ne] the easy termination, and
obtain[ed] a favorable judgment on the merits.’” (Ibid. [quoting Warren, supra,
220 Cal.App.3d at p. 1303].)
We disagree with this analysis. True, res judicata and collateral estoppel
are procedural concepts and affirmative defenses. Both are often more concerned with
the need for finality and avoiding relitigation of issues than with the actual merits of the
earlier case. (Rodgers v. Sargent Controls & Aerospace (2006) 136 Cal.App.4th 82, 88
[“preclusion of relitigation of claims pursuant to the principles of res judicata is an
affirmative defense that must be pled or otherwise raised in the trial court to avoid
waiver”]; Dalany, supra, 42 Cal.App.4th at p. 829 [“Res judicata and collateral
estoppel . . . are not concerned with the actual merits of a prior adjudication but solely
with the need for finality”].)
But that is not to say res judicata and collateral estoppel rulings are always
unrelated to the merits of a given claim or issue. Collateral estoppel, by definition,
“prohibits the relitigation of issues argued and decided in a previous case.” (DKN, supra,
61 Cal.4th at p. 824.) In this way, it differs from a statute of limitations defense, which
considers only the timeliness of the plaintiff’s suit and not the defendant’s culpability.
Cases holding that a resolution on statute of limitations grounds is not a favorable
termination (see, e.g., Warren, supra, 220 Cal.App.3d at pp. 1302-1303) are thus
inapposite.
Moreover, if an issue was previously litigated in another case and a party’s
culpability on that issue was decided on the merits, it is illogical to require that party to
“‘eschew’” her collateral estoppel defense in the second case, as JSJ mandates, and to
litigate the issue again to a favorable judgment on the merits, simply so she may later
meet the favorable termination element of her malicious prosecution claim. Such a rule
is inconsistent with one of the main purposes of the doctrines of res judicata and

20
collateral estoppel: promoting judicial economy and conserving judicial resources. (See
Proctor v. Vishay Intertechnology, Inc. (2013) 213 Cal.App.4th 1258, 1272.)
Further, requiring trial courts to look behind the collateral estoppel ruling
and consider the procedural history of the underlying litigation is consistent with our
Supreme Court’s instruction that we “‘look at the judgment as a whole in the prior
action’” and evaluate whether the termination ‘“reflect[s] the merits of the action and the
plaintiff’s innocence of the misconduct alleged in the lawsuit”’ when considering
whether the favorable termination element was met. (See Casa Herrera, supra,
32 Cal.4th at pp. 341-342; see also Olivares, supra, 40 Cal.App.5th at p. 354 [we should
“examine[] the record [of the underlying case] to see if the disposition reflects the
opinion of the court . . . that the [underlying] action would not succeed”].) We therefore
disapprove of and decline to follow the bright line rule adopted in JSJ.
D. Application
Against that backdrop, we turn to the precise issue presented here: does the
termination of Case 2 on collateral estoppel grounds based on Case 1 qualify as a
favorable termination for purposes of Case 3? Based on the procedural history of the
three cases, we find it does.
The issue of NHOM’s ability to retain Alston and to prosecute the lease
dispute against McNaughton without McNaughton’s consent was extensively litigated
and decided on the merits in Case 1. The arbitrator found Copenbarger properly hired
Alston as counsel for NHOM to initiate and prosecute the unlawful detainer actions
against McNaughton; the trial court confirmed the arbitration award and denied
McNaughton’s motion to disqualify Alston; we denied McNaughton’s motion to
disqualify Alston in the subsequent appeal; and in NHOM 1, we affirmed the judgment
6
against McNaughton and explicitly endorsed the arbitrator’s findings. The litigation of
6
Additionally, in NHOM 2 (which we decided after the trial court entered
judgment for Alston in Case 2), we criticized McNaughton for “rehashing his contention

21
the issue in Case 1 is precisely why Alston won in Case 2. Thus, the dismissal of Case 2
on collateral estoppel grounds was not purely procedural; it reflected the merits (or lack
7
thereof) of Case 2. We therefore conclude Alston established a termination of Case 2 in
their favor for purposes of the malicious prosecution claim in Case 3.
Consequently, we reverse the dismissal and the portion of the trial court’s
order granting the anti-SLAPP motions on the malicious prosecution claim and remand
this matter for further consideration of the second prong of the anti-SLAPP statute. The
court’s ruling did not address Alston’s probability of succeeding on the other elements of
the malicious prosecution claim or Alston’s evidentiary objections, and we decline to
consider those matters in the first instance. (See Collier v. Harris (2015) 240
Cal.App.4th 41, 58 [noting most appellate courts decline to decide prong two in the first
instance].) “We think it best that the able and experienced trial judge decide the issue”
first. (Ibid.)

DISPOSITION
The portion of the trial court’s order granting McNaughton’s anti-SLAPP
motion as to Alston’s fraud claim is affirmed. The portion of the order granting
McNaughton’s and Prenovost’s anti-SLAPP motions as to Alston’s malicious
prosecution claim is reversed. The matter is remanded for further proceedings consistent

that because he is a 50 percent owner of NHOM, its counsel could not have been
authorized to represent it, or to pursue any litigation against him, absent his own
consent,” when that contention was already “squarely rejected by the arbitrator, and the
rejection was expressly endorsed by this court in the prior appeal.” (NHOM 2, supra,
at G052704, G052984.)
7
In light of this holding, we do not address Alston’s argument that a party
may sue for malicious prosecution “when a knowingly ill-founded suit brought only to
harass or vex the defendant fails for procedural reasons.” (See Lackner v. LaCroix
(1979) 25 Cal.3d 747, 752, fn. 3 [declining to decide that issue].) As discussed above,
Case 2 did not fail “for procedural reasons”; it failed on the merits.

22
with this opinion. Alston shall recover their costs on appeal. (Cal. Rules of Court,
rule 8.278(a)(1).)

GOETHALS, J.

WE CONCUR:

O’LEARY, P. J.

MOORE, J.

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