Maraziti v. Stone CA4/1

Filed 2/28/13 Maraziti v. Stone 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NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication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 APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

RICHARD J. MARAZITI et al., D059749

Plaintiffs and Appellants,

v. (Super. Ct. 37-2010-00099817-CU-
PO-CTL)
DAVID A. STONE, JR.,

Defendant and Respondent.

APPEAL from an order of the Superior Court of San Diego County, Ronald S.

Prager, Judge. Affirmed.

Richard J. Maraziti and Signature Log Homes, LLC (Signature, together with

Maraziti, Plaintiffs) entered into a joint venture with David A. Stone, Jr. whereby they

agreed to build log cabins on five unimproved lots owned by Stone in Big Bear,

California. In the underlying action, Plaintiffs filed a complaint against Stone for

amounts allegedly due under the agreement. Stone filed a cross-complaint alleging,
among other things, that Plaintiffs overcharged him for construction costs. Both sides

failed to prevail on their respective claims.

Plaintiffs filed this action for malicious prosecution against Stone based on his

prosecution of the cross-complaint. Plaintiffs appeal from an order granting Stone's

special motion to strike their complaint under Code of Civil Procedure section 425.16,

the anti-SLAPP (strategic lawsuit against public participation) statute. (All undesignated

statutory references are to the Code of Civil Procedure.) Plaintiffs contend the trial court

erred in granting the anti-SLAPP motion because they established a lack of probable

cause existed to file and prosecute the cross-complaint. They also argue that the trial

court erred in refusing to lift the discovery stay to conduct discovery on the issue of

probable cause. We reject their contentions and affirm the order granting the motion to

strike.

FACTUAL AND PROCEDURAL BACKGROUND

Plaintiffs instigated the underlying action against Stone for amounts allegedly due

under their contract. The trial court sustained Stone's demurrer to Plaintiffs' operative

complaint on the ground Plaintiffs were unlicensed contractors and thus precluded from

any recovery. Plaintiffs appealed from the judgment of dismissal and the appellate court

affirmed.

Stone's operative cross-complaint against Plaintiffs alleged causes of action for

breach of contract, fraud, breach of the covenant of good faith and fair dealing, and for

money had and received. Among other things, Stone alleged that Plaintiffs failed to

timely complete the log cabins and that he paid for materials and services used on third-

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party projects. Stone also claimed that Maraziti and Signature were alter egos such that

Signature's debts and liabilities should be treated as the debts and liabilities of Maraziti.

The cross-complaint proceeded to trial without a jury and the trial court rendered a

lengthy statement of decision finding that Stone would take nothing.

Briefly, the trial court concluded that Stone provided no proof that Maraziti was

the alter ego of Signature and stated it would decide whether Stone was entitled to any

recovery against Signature. After reviewing the evidence, the underlying trial court

found that any documents fabricated by Stone did not impact the litigation and that Stone

believed the validity of his claims. It concluded, however, that Stone was not entitled to

any recovery because he failed to provide a qualified accounting of his profits and losses

under the contract.

Plaintiffs then filed the instant action for malicious prosecution against Stone and

his underlying attorneys. The underlying attorneys filed an anti-SLAPP motion and

Stone filed a joinder to that motion. The trial court denied Plaintiffs' ex parte application

for relief from the anti-SLAPP statute's automatic discovery stay (§ 425.16, subd. (g))

and for a continuance of the hearing date. After ruling on numerous evidentiary

objections, the trial court granted the anti-SLAPP motion and issued a judgment in favor

of Stone and his underlying attorneys. Plaintiffs timely appealed, but later dismissed the

appeal as to Stone's underlying attorneys.

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 DISCUSSION

I. Burden of Proof and Standard of Review

A special motion to strike under section 425.16 allows a defendant to gain early

dismissal of a lawsuit that qualifies as a SLAPP. (§ 425.16, subd. (a).) In ruling on an

anti-SLAPP motion, the trial court must first decide whether the moving defendant has

made a prima facie showing that the plaintiff's suit is subject to section 425.16, i.e., that

the challenged claims arise from an act or acts in furtherance of his or her right of petition

or free speech. (§ 425.16, subd. (b)(1); Equilon Enterprises v. Consumer Cause, Inc.

(2002) 29 Cal.4th 53, 67 (Equilon).) If the defendant establishes the anti-SLAPP statute

applies, the burden shifts to the plaintiff to demonstrate a "probability" of prevailing on

the claim. (Equilon, supra, 29 Cal.4th at p. 67.) In making that determination, the court

must "consider the pleadings, and supporting and opposing affidavits stating the facts

upon which the liability or defense is based." (§ 425.16, subd. (b)(2).) "The evidence

submitted by the plaintiff must be admissible [citation], and, if credited at trial, must

support a judgment in his favor. [Citations.] Significantly, the trial court cannot and

does not weigh the moving party's evidence against the opposing party's evidence, but

addresses the factual and legal issues as in a motion for summary judgment. [Citation.]

If the opposing party fails to make the requisite showing, the motion must be granted.

[Citation.]" (Slaney v. Ranger Ins. Co. (2004) 115 Cal.App.4th 306, 318.) We review de

novo the trial court's rulings on an anti-SLAPP motion. (Thomas v. Quintero (2005) 126

Cal.App.4th 635, 645.)

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 II. Analysis

A. Stone's Request to Disregard Portions of Plaintiffs' Opening Brief

Stone argues that we should disregard Plaintiffs' statement of the case because it

consists of argument, rather than a fair summary of the facts. The opening brief is

required to " '[p]rovide a summary of the significant facts' " in the record, including "all

the significant facts, not just those beneficial to the appellant." (In re S.C. (2006) 138

Cal.App.4th 396, 402; Cal. Rules of Court, rule 8.204(a)(2)(C).) Plaintiffs' statement of

the case does not conform to this requirement; however, we exercise our discretion to

disregard the noncompliance. (Cal. Rules of Court, rule 8.204(e)(2)(C).)

Stone also contends we should disregard Plaintiffs' arguments because they are

supported by string cites to hundreds of pages of the record. "It is the duty of a party to

support the arguments in its briefs by appropriate reference to the record, which includes

providing exact page citations." (Bernard v. Hartford Fire Ins. Co. (1991) 226

Cal.App.3d 1203, 1205.) We are unable to adequately evaluate which facts Plaintiffs

believe support their position because they have provided us with block page references.

(Spangle v. Farmers Ins. Exchange (2008) 166 Cal.App.4th 560, 564, fn. 3.) Instead of

striking the brief, however, we have chosen to disregard the defects and consider the brief

as if it were properly prepared. (Cal. Rules of Court, rule 8.204(e)(2)(C).)

B. Probability of Prevailing

Plaintiffs do not challenge the trial court's conclusion that their malicious

prosecution claim fell within the purview of the anti-SLAPP statute. (Jarrow Formulas,

Inc. v. LaMarche (2003) 31 Cal.4th 728, 735 (Jarrow).) Accordingly, we decide whether

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Plaintiffs presented evidence sufficient to "[establish] that there is a probability that

[they] will prevail on the claim." (§ 425.16, subd. (b)(1).)

To establish their claim for malicious prosecution, Plaintiffs were required to show

that a prior claim initiated by Stone was (1) pursued to a legal termination favorable to

the Plaintiffs, (2) brought without probable cause, and (3) initiated with malice. (Villa v.

Cole (1992) 4 Cal.App.4th 1327, 1335.) Here, trial on Stone's cross-complaint resulted

in a legal termination favorable to Plaintiffs. Thus, we examine whether Stone filed and

prosecuted the cross-complaint without probable cause.

A party has probable cause to bring the underlying suit if, objectively viewed, its

claims were legally tenable, meaning a reasonable attorney would conclude that the

underlying action was not totally and completely without merit. (Sheldon Appel Co. v.

Albert & Oliker (1989) 47 Cal.3d 863, 885 (Sheldon Appel).) However, "every case

litigated to a conclusion has a losing party, but that does not mean the losing position was

not arguably meritorious when it was pled. [Citation.] And just as an action that

ultimately proves nonmeritorious may have been brought with probable cause,

successfully defending a lawsuit does not establish that the suit was brought without

probable cause. [Citations.]" (Jarrow, supra, 31 Cal.4th at p. 743.) Whether there was

probable cause to initiate or continue to prosecute an action in light of the facts known to

the malicious prosecution defendant is a legal question for the court to decide. (Sheldon

Appel, supra, 47 Cal.3d at p. 875.) As we shall explain, Plaintiffs failed to show a

probability of prevailing on the lack of probable cause element of their malicious

prosecution claim.

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 As a threshold matter, we reject Stone's argument that probable cause existed as a

matter of law because the underlying trial court denied Plaintiffs' motion for summary

adjudication of Stone's cross-complaint. Stone is correct that the denial of a summary

judgment motion in the underlying case can provide persuasive evidence that a suit does

not totally lack merit. (Roberts v. Sentry Life Insurance (1999) 76 Cal.App.4th 375, 383.)

Here, the trial court's ruling shows it never examined the separate statements to determine

whether triable issues of material fact existed. Rather, the trial court denied the motion

on the technical ground that it could not summarily adjudicate the ten items listed in the

motion under the version of the summary judgment statute that existed at that time.

Accordingly, the denial of Plaintiffs' request to summarily adjudicate Stone's cross-claims

in the underlying case is not a reliable indicator that probable cause existed.

Plaintiffs claim that Stone filed and prosecuted the cross-complaint without

probable cause because he used fabricated documents to support his claims. Plaintiffs'

argument, however, is conclusory as they failed to explain how any specific fabricated

document impacted the litigation. In any event, the factual findings by the trial court

show that any fabricated documents had no impact on the litigation.

In its statement of decision in the underlying action, the trial court noted that

Maraziti presented the testimony of David Olekslow, a questioned document examiner.

Olekslow testified that Stone "appeared to have" manipulated some e-mails, but the trial

court found "[t]he effect of this so-called manipulation was marginal in the scheme of

things." With regard to " 'Sub-Rider A,' " Olekslow opined that it had never been attached

to the principal agreement. The trial court concluded, however, that the significance of

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Sub-Rider A was "collateral to the dispute" between the parties. Finally, the trial court

found that the spreadsheets Stone offered to prove his expenditures and Olekslow's

testimony that some of the spreadsheet entries "may have been duplications" to be

unimportant because Stone testified that the spreadsheets were " 'working documents' "

and that he could not attest to their correctness.

Plaintiffs next claim that Stone continued to prosecute the cross-complaint or a

portion of the cross-complaint without probable cause and without evidence justifying his

claims. Specifically, Plaintiffs note that Stone initially requested over $3 million in

damages, that Stone reduced the damage claim just before trial, and the trial court

ultimately found that only $12,000 was at issue. Plaintiffs claim that Stone maliciously

prosecuted $3 million in damages up until the moment he abandoned the claim. Plaintiffs

cite the reduction in damages and Citi-Wide Preferred Couriers, Inc. v. Golden Eagle Ins.

Corp. (2003) 114 Cal.App.4th 906 (Citi-Wide) to support their assertion that Stone lacked

probable cause to continue prosecuting the cross-complaint because his damage claims

were fabricated.

In Citi-Wide, the court held that a malicious prosecution suit may be maintained

where most but not all of the amount sought in a prior action was claimed without

probable cause. (Citi-Wide, supra, 114 Cal.App.4th at p. 914.) In that case, an insurer

sued its insured for $7,861 in alleged unpaid premiums but then admitted that only

$1,900 was owed. (Id. at p. 909.) Ignoring its admission, the insurer offered to settle for

$7,900 several days before trial. (Ibid.) On the day of trial, the insurer dismissed the

action with prejudice and signed a stipulation stating that the premiums had in fact been

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fully paid. (Id. at p. 910.) On these facts, the appellate court concluded that the trial

court improperly granted the insurer's in limine motion to preclude the insured from

presenting any evidence at trial that the insurer lacked probable cause to prosecute the

underlying action. (Id. at p. 914.) The appellate court reasoned that the insured had a

right to have a trier of fact resolve the question of the insurer's knowledge or belief in the

validity of its claims. (Id. at p. 913.)

The instant action is distinguishable. In response to form interrogatories, Stone

claimed $1,527,455 in damages to personal property based on loss of material taken from

job sites, labor fictitiously filed for lots 205 to 207, and damage to "[w]ater meters,

cabinets, windows, stairway, thru bolts." Stone claimed that he lost total income of

$1,527,455 based on, among other things, the amounts overpaid and overbilled. Finally,

he claimed $1.6 million in other damages based on loss of anticipated net profit on lots

202 and 203. Plaintiffs presented no evidence showing that these damage requests were

false or that Stone made the claims believing they were false. In contrast, Stone

substantiated part of his claims with loss of profit and loss of income calculations for lots

206 and 207.

The trial court commented in its statement of decision that Stone initially sought

about $3 million in damages and that he reduced his claim to about $46,700 before trial.

However, it also noted that both parties "engaged in considerable discovery in

preparation for trial" and presented a "staggering" amount of documentation. The trial

court, however, declined to find Plaintiffs liable under the contract because Stone failed

"to provide a qualified accounting" of the contract profits or losses. Unlike Citi-Wide,

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Stone presented voluminous evidence to support his claim, but lost because he failed to

present an accounting. Additionally, although the trial court denied Stone any recovery

under the cross-complaint, it found that "Stone believe[d] he paid monies for items which

he says he already paid Maraziti." These findings show that probable cause existed to

file the cross-complaint.

Plaintiffs assert that Stone's claims for lost profits were not recoverable under the

contract. To support this assertion, Plaintiffs cite the Miller and Starr treatise that an

owner's measure of damages when a contractor breaches a construction contract is the

difference between the balance due on the construction contract and the cost of

completing the work. While this may be the correct measure of damages on a typical

construction contract involving a contractor hired by a real property owner to construct

improvements on real property, the contract here is not a typical construction contract.

Rather, the contract expressly provided that the property and improvements thereon

would be marketed for sale and "sold for profit." Thus, the parties clearly contemplated

lost profits as a measure of damages when they entered into the contract. (Civ. Code,

§ 3300 ["For the breach of an obligation arising from contract, the measure of damages,

except where otherwise expressly provided by this code, is the amount which will

compensate the party aggrieved for all the detriment proximately caused thereby, or

which, in the ordinary course of things, would be likely to result therefrom."].)

In a one paragraph argument, Plaintiffs point out that Stone declared the contract

" 'null and void' " in a 2002 letter. However, they provided no argument or analysis

explaining how this fact shows Stone lacked probable cause to file the cross-complaint

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based on alleged breaches occurring before that date and underlying complaint filed in

2002. Accordingly, we deem the issue abandoned. (Landry v. Berryessa Union School

Dist. (1995) 39 Cal.App.4th 691, 699–700 (Landry).)

Finally, Plaintiffs set forth portions of Maraziti's declaration which were not

objected to below. They assert that these portions of the declaration, if believed,

demonstrated a probability they would prevail in their malicious prosecution claim. They

also argue that the trial court improperly sustained objections to other portions of the

declaration that would have demonstrated a probability they would prevail in their

malicious prosecution claim.

For purposes of analysis, we examined Maraziti's entire 23-page declaration to

determine whether it contained evidence showing Stone lacked probable cause to file his

cross-complaint, thus establishing a probability that Plaintiffs would prevail on the merits

of their malicious prosecution claim. The first five paragraphs of the declaration

established Maraziti's knowledge and authenticated certain documents. Maraziti next

stated that Stone prosecuted his cross-complaint based on fabricated documents, that the

summary adjudication motion was not decided on its merits, and then authenticated

numerous documents. The balance of the declaration stated that Stone prosecuted his

cross-complaint based on fabricated documents, that Stone knew the documents were

fabricated, that Stone exaggerated his claims and then dropped most of them at the last

moment, and that Stone failed to cooperate during discovery. Maraziti's supplemental

declaration provided foundation for some exhibits and again attested that Stone altered

numerous documents.

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 Maraziti's declarations do not contain evidence showing Stone lacked probable

cause to file and prosecute the underlying cross-complaint. As we discussed above, the

underlying trial court evaluated the documents that Stone allegedly falsified, but

nonetheless concluded that the fabricated documents did not impact the litigation. Based

on these findings, Stone's delay in providing any documents could not have affected the

litigation. While Plaintiffs suggest in their reply brief that the underlying trial court did

not have all of the fabricated documents and thus did not consider all of the evidence,

Plaintiffs failed to cite any particular document and explain how the document

established that Stone lacked probable cause to prosecute the underlying cross-complaint.

Finally, Plaintiffs contend that the trial court erroneously excluded some of the

documents they presented in opposition to the anti-SLAPP motion. Assuming, without

deciding, that the trial court erroneously excluded these documents, Plaintiffs again failed

to explain how these documents established that Stone lacked probable cause to prosecute

the cross-complaint. Plaintiffs argued some of the excluded documents reveal that Stone

"made a huge profit and suffered no loss." Accordingly, they conclude that Stone

maliciously sought over $3 million in damages. These documents were escrow closing

statements on two of the lots showing money due to Stone. However, as the trial court

impliedly noted in deciding the underlying action, evidence showing purported profits or

losses are meaningless without an accounting.

Plaintiffs failed to show a probability of prevailing on the lack of probable cause

element of their malicious prosecution claim. Accordingly, the trial court properly

granted the motion to strike.

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C. Denial of Plaintiffs' Request for a Continuance and for Discovery

The filing of an anti-SLAPP motion automatically stays "[a]ll discovery

proceedings." (§ 425.16, subd. (g).) To justify lifting the discovery stay, the plaintiff

must demonstrate that the proposed discovery is both necessary in the context of the

issues raised by the anti-SLAPP motion and must explain what facts the plaintiff expects

to uncover. (1-800 Contacts, Inc. v. Steinberg (2003) 107 Cal.App.4th 568, 593.) The

decision whether to lift the discovery stay is within the trial court's discretion. (Tutor-

Saliba Corp. v. Herrera (2006) 136 Cal.App.4th 604, 617.)

Here, Plaintiffs requested that the trial court continue the hearing on the anti-

SLAPP motion to allow them to conduct discovery on whether Stone's counsel (1) did a

forensic analysis of Sub-Rider A or other allegedly fabricated documents, and

(2) objectively analyzed Stone's damage claims, including any expert analysis. Plaintiffs

sought to depose Stone, any experts, Stone's attorneys, and the person most

knowledgeable regarding the authenticity of documents and damages. The trial court

denied the request, ruling that the information Plaintiffs sought was covered by the

attorney-client privilege and the attorney work product doctrine.

Plaintiffs assert the trial court abused its discretion when it denied their request to

conduct limited discovery because Stone waived the "work product privilege" when his

attorneys asserted that they reviewed documents relating to the dispute, gave their

impressions, and expressed their belief that probable cause existed for the cross-claims.

We reject their assertion.

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 As the party opposing the attorney-client privilege, Plaintiffs had the burden of

establishing that the privilege did not apply, that an exception existed, or that there was

an express or implied waiver. (Evid. Code, §§ 912, 917, subd. (a); Titmas v. Superior

Court (2001) 87 Cal.App.4th 738, 745.) Plaintiffs, however, cited no authority and

provided no analysis to support their assertion that Stone waived either the attorney-client

privilege or the protection afforded by the attorney work product doctrine. Plaintiffs

similarly cited no authority and provided no analysis to support their implied assertion

that the trial court erred when it concluded that discovery would be futile because the

information they sought was covered by the attorney-client privilege or the attorney work

product doctrine. Plaintiffs also failed to show how Stone or Stone's attorneys disclosed

a significant part of work product so as to waive the protection afforded by the attorney

work product doctrine. (OXY Resources California LLC v. Superior Court (2004) 115

Cal.App.4th 874, 891.) Accordingly, we deem these issues abandoned. (Landry, supra,

39 Cal.App.4th at pp. 699–700.) In any event, we reviewed the declarations filed by

Stone's attorneys in opposition to the anti-SLAPP motion and conclude that the

declarations set forth nonprotected information based on the personal knowledge of the

declarants and do not disclose any confidential communications with Stone.

Plaintiffs also assert that some of the discovery they sought was not subject to the

attorney-client privilege or attorney work product doctrine. However, they failed to

detail how additional discovery on the matters raised in their discovery request was

necessary in the context of the issues raised in the anti-SLAPP motion. (The Garment

Workers Center v. Superior Court (2004) 117 Cal.App.4th 1156, 1162.) In their ex parte

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application for discovery, Plaintiffs strenuously argued that Stone's exaggerated damage

claims and falsified documents showed a lack of probable cause to prosecute the

underlying cross-complaint. As the underlying trial court noted in its statement of

decision, both parties "engaged in considerable discovery in preparation for trial" and

presented a "staggering" amount of documentation. After reviewing all the evidence, the

underlying trial court concluded that the fabricated documents did not impact the

litigation, Stone believed the validity of his claims, and Stone's failure to provide a

qualified accounting doomed his claims. Plaintiffs have not detailed what nonprivileged

information they hoped to uncover and it appears no amount of discovery could

undermine this strong evidence of probable cause.

On this record, Plaintiffs have not shown that the trial court abused its discretion

in denying their discovery request. Having failed to make their case for discovery,

Plaintiffs necessarily failed to show good cause for a continuance.

DISPOSITION

The order is affirmed. Respondent is entitled to his costs on appeal.

MCINTYRE, Acting P. J.

WE CONCUR:

O'ROURKE, J.

IRION, J.

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