Wu v. Lian Tong, LLC CA1/3

Filed 3/30/23 Wu v. Lian Tong, LLC CA1/3

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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
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ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION THREE

BING WU et al.,
Plaintiffs and Appellants, A163131, A163455, A163635,
A163768
v.
LIAN TONG, LLC, et al., (City & County of San Francisco
Super. Ct. No. CGC-21-589219)
Defendants and Respondents.

Appellants, Bing Wu and Kai Ming Lei, filed this malicious prosecution
action against two sets of respondents, Lian Tong, LLC and its owner Sheng
Liu (collectively, Lian Tong), and Lian Tong’s former counsel, the Horner Law
Group, P.C., Clifford Horner, and Brendan Dooley (collectively, Horner Law).
Appellants contend that respondents lacked probable cause and acted with
malice when they pursued a claim against appellants for breaching a
restaurant construction contract. Lian Tong and Horner Law each filed
special motions to strike appellants’ complaint pursuant to California’s anti-
SLAPP statute. (Civ. Proc. Code, § 425.16, subd. (b); undesignated statutory
references are to this code.) The trial court granted both motions and
awarded respondents attorney fees. We affirm.

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 BACKGROUND
I. The Underlying Case
The underlying case arose out of a failed project to construct a
restaurant at two commercial addresses (565 and 575) on 4th Street in San
Francisco.
A. The Contracts
Property owner Lian Tong retained Bing Wu Construction Company
(BW Construction) to work on its restaurant project pursuant to a contract
executed on March 30, 2014 (the BW contract). Three individual contractors
signed the BW contract on behalf of BW Construction: James Chen, who
drafted the contract, and appellants, Wu and Lei. The BW contract was
executed on behalf of Lian Tong by Yi Fang Liu (Y.F. Liu), who is the father
of respondent Sheng “Leo” Liu (Liu). The seven-page contract outlines work
BW Construction agreed to perform, which ranged from demolition to
finishing work to other “miscellaneous” tasks. (Block capitalization omitted.)
The contract price was $400,000, which was to be paid in installments as
various stages of the project were completed. The last two terms of the
contract became the focus of the underlying case, so we repeat them here:
“Time of Performance [¶] The work specified in this contract shall be
started immediately once the owner provides the approved permits and
drawings. The duration for the whole project is about 6 months and the
whole work shall be completely done after the 6 months of the beginning
date.
“Permits and Approvals [¶] Owner shall pay for all the fees to apply
for the state and local permits, the cost to apply for the utilities services and
all necessary surveys for performing the work specified above. If the
contractor pays the permit fee during the time for processing, the owner shall

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reimburse the money to the contractor per invoice. The owner is responsible
for providing the approved & stampped [sic] plan for #575 which is supposed
to be built [as] a restaurant.” This last sentence was handwritten on the
typed page.
Ten months later, on February 6, 2015, Chen and Y.F. Liu executed a
“Contract Termination Agreement” on behalf of BW Construction and Lian
Tong. The document was handwritten by Chen in Chinese on a piece of lined
paper.
On February 12, 2015, Chen on behalf of Egoodat Inc. and Y.F. Liu on
behalf of Lian Tong executed a new construction contract (the Egoodat
contract). This written agreement is a marked up version of the BW contract
that substituted Egoodat’s name for BW Construction’s name at the top of the
document and added the following handwritten term at the bottom: “the
whole project is awarded to Egoodat, Inc. since the date of 2/12/15.”
Appellants are not parties to the Egoodat contract.
B. The Lawsuit
In February 2016, Lian Tong filed a complaint for damages arising out
of the restaurant project, alleging causes of action for breach of contract
against BW Construction, breach of contract and negligence against Egoodat,
and fraud and breach of contract against Chen. As support for these claims,
Lian Tong alleged the following facts: The BW contract Chen negotiated on
behalf of BW Construction provided that work would begin “immediately”
once Lian Tong provided “approved permits and drawings,” and the parties
“agreed and understood” that the project would be completed within six
months, “or approximately by early October 2014.” For months, Chen made
false representations that work was progressing. In February 2015, Lian
Tong discovered that no work had been completed, and Chen admitted that

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his business partner had stolen the BW contract funds, which prevented BW
Construction from starting work. Because BW Construction failed to
perform, Lian Tong had to find another contractor, and Chen proposed that
his other company, Egoodat, would do the work. On February 12, 2015, the
parties made handwritten changes to the BW contract and then executed
that document. Egoodat’s work was deficient, and the project was never
completed. Ultimately, Lian Tong was forced to terminate its lease with its
restaurant tenant and suffered damages in excess of $1,000,000.
Chen and Egoodat filed a joint answer to Lian Tong’s complaint, and
Egoodat also filed a cross-complaint against Lian Tong for breach of contract
and “Common Counts.” Initially, BW Construction failed to respond to the
complaint, but in September 2016, appellants obtained relief from default
and filed a general denial answer on behalf of BW Construction, which they
identified as their fictitious business name.
Appellants also filed a cross-complaint against Lian Tong and Y.F. Liu
for breach of contract, fraud, and declaratory relief. Appellants alleged that
Lian Tong breached the 2015 termination contract by failing to release
appellants from the BW contract and that Y.F. Liu fraudulently induced
appellants to execute the 2015 contract by falsely representing that
appellants would be released from the BW contract.
As support for its cross-claims, appellants alleged the following facts:
After executing the BW contract, Lian Tong caused delays that prevented BW
Construction from starting work on the project by failing to provide approved
plans and failing to obtain permission from its property owners’ association.
Due to such delays, “none of which were caused” by appellants, it became
“impracticable and/or impossible” for BW Construction to perform the BW
contract. On February 6, 2015, appellants and Lian Tong entered into a “new

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written contract,” which released appellants’ from the BW contract in
exchange for a payment of $20,500 to Lian Tong and its agent, Y.F. Liu.
When this new contract was negotiated, Y.F. Liu represented that appellants
would be released from the BW contract if they paid $20,500, but Lian Tong
and Y.F. Liu never intended to release appellants or cancel the BW contract.
Pretrial litigation was vigorous and protracted, as documented in the
30-page register of actions for the underlying case. Meanwhile, the parties
actively pursued discovery, taking 11 depositions, exchanging interrogatories,
and disclosing experts. Chen, appellants Wu and Lei, and respondent Liu all
gave depositions. However, Y.F. Liu was in China, and the trial court denied
appellants’ motion to compel Lian Tong to produce Y.F. Liu for a deposition.1
In January 2019, appellants filed a first amended cross-complaint,
which included the following new allegations: Immediately before the BW
contract was executed, Y.F. Liu made false representations that Lian Tong
had obtained all necessary approvals to begin construction, and that
construction could begin immediately. When the BW contract was executed,
Lian Tong’s restaurant project had not been approved by the Palms Owners’
Association (the Palms). Lian Tong’s delay in obtaining approval from the
Palms constituted a breach of the BW contract, prevented BW Construction
from performing its contractual obligations, and “barred” Lian Tong from
terminating the BW contract, appellants alleged. Appellants alleged further
that they were harmed because Lian Tong misled them to believe that
approval from the Palms had been obtained, and then “unreasonably delayed
in obtaining [that] approval until January 2015.”

1 The register of actions lists several documents that appear to be
relevant to matters discussed in the appellate briefs, but that the court does
not find in the Appellants’ Appendix, such as this discovery order.

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 Lian Tong challenged appellants’ amended cross-claims by filing a
motion to strike, a motion for judgment on the pleadings, and a motion for
summary judgment. To support its summary judgment motion, Lian Tong
obtained a declaration from Y.F. Liu that was executed in China. Y.F. Liu
stated, among other things, that: Chen and his partner BW Construction
agreed to build the restaurant pursuant to plans for the initial work that had
been prepared by Derrick Wu, and Lian Tong provided those approved plans
and permits to BW Construction, as the BW contract required; prior to
execution of the BW contract, Y.F. Liu did not say or represent that Lian
Tong had already obtained approval for the project from the Palms; BW
Construction and Chen caused delays by failing to obtain consent for
construction from the Palms and by failing to take other steps necessary to
commence construction; when the BW contract was terminated, Y.F. Liu did
not represent that appellants or Chen would be released from the contract
but only that the agreement was terminated.
On May 14, 2019, the superior court granted Lian Tong’s motion to
strike portions of the first amended cross-complaint, including appellants’
prayer for attorney fees, which was stricken because they failed to allege any
contractual or statutory basis for recovering attorney fees. The court also
granted Lian Tong’s motion for judgment on the pleadings, but granted
appellants leave to amend its fraud claim and to allege a new cause of action
for recission of the 2015 termination contract. That ruling mooted Lian
Tong’s fully briefed motion for summary judgment, which was taken off
calendar. The following month, appellants dismissed Y.F. Liu as a cross-
defendant. The register of actions shows that appellants filed a second

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amended cross-complaint, but as best we can determine, this document is not
in the appellate record.2
In September 2019, Lian Tong filed its operative first amended
complaint, which included the following new allegations: BW Construction
was a 50/50 partnership between appellants and Chen. The BW contract
required Lian Tong to provide “approved and stamped plans for the project,”
but did not hold Lian Tong responsible for obtaining approvals from entities
other than the city’s building department, such as the Palms. When the BW
contract was negotiated, the parties knew that Y.F. Liu did not speak English
and was soon to leave on a trip to China. So they made an oral agreement
that the Chen-BW Construction partnership would obtain any additional
approvals that were required “to commence and complete the construction of
the restaurant.” Subsequently, when Lian Tong learned that appellants and
Chen failed to obtain approval from the Palms, it “mitigate[d] this breach” by
enlisting other agents who assisted Lian Tong in finally securing approval
from the Palms on January 5, 2015.
C. The Trial
In late October 2019, the case was assigned for a jury trial before the
honorable Newton Lam. Lian Tong filed an in limine motion seeking
permission for Y.F. Liu to testify via Skype from China, which appellants
opposed pursuant to a prior discovery order. When appellants’ motion to

2 Appellants have filed a 4,193-page Appellant’s Appendix, which is
accompanied by indices that list multiple “Compendium[s] of Evidence” some
containing hundreds of pages of documents. Appellants’ indices are
inadequate. (Cal. Rules of Court, rule 8.124(d)(1), rule 8.144(b)(5).) Each
volume of an appellants’ appendix must include an index that lists “each
document” contained in the appendix, and the “page where it first appears.”
(Rule 8.144(b)(5)(A).)

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compel Y.F. Liu’s deposition was denied, the court had ruled that Lian Tong
would not be permitted to rely on Y.F. Liu’s declaration or trial testimony
“unless and until” they made arrangements for appellants to take his
deposition.
During the in limine hearing, Lian Tong argued that Y.F. Liu should be
permitted to testify at trial notwithstanding the discovery order because he
had been restricted by the government from leaving China and, under
international rules, his deposition could not be compelled but his testimony
at trial potentially could be. The trial court recognized that Y.F. Liu was a
“significant witness” for “every side” because he was “the primary mover with
regards to the inception of the relationship between the parties.” But
ultimately it barred Y.F. Liu’s testimony pursuant to the discovery order.
Appellants also filed a successful pretrial motion to limit the testimony
of Lian Tong’s expert, Derrick Wu. According to Lian Tong, Wu is a licensed
architect and construction manager with 30 years’ experience. Lian Tong
anticipated eliciting a wide range of opinions from Wu, including that BW
Construction was responsible for obtaining approval from the Palms.
However, at trial the court limited Wu’s expertise “to that of an architect.”
In November 2019, the jury trial was held over the course of two and a
half weeks. During trial, appellants dismissed their rescission claim against
Lian Tong and elected to go forward on their cross-claim for fraud. After the
close of evidence but before the case was submitted to the jury, the court
ruled on multiple motions for directed verdicts.
Appellants sought a directed verdict of Lian Tong’s breach of contract
claim pursuant to their affirmative defense that performance of the BW
contract was impossible, arguing that they could not have completed the
contract before it was terminated due to delays in obtaining approval from

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the Palms. Characterizing this defense as an issue of law, the court
concluded that because approval from the Palms was not obtained until
January 2015, BW could not have completed its work within the six-month
contract period. On this basis, the court granted appellants (and Chen) a
directed verdict as to Lian Tong’s cause of action for breach of the BW
contract. By contrast, the court found that appellants’ cross-claim for fraud
was based on issues of fact. Thus, although the court expressed confusion
and skepticism about appellants’ fraud theories, Lian Tong’s motion for a
directed verdict of that cross-claim was denied.
On December 5, 2019, the jury returned verdicts on remaining claims.
We do not find a complete set of the verdicts in this appellate record, but it
appears from the judgment, that the jury found Lian Tong proved only one
claim, its negligent misrepresentation claim against Chen, for which it was
awarded $35,880. Moreover, Lian Tong was held liable to appellants for
fraudulent misrepresentation, although appellants were awarded $75,000
instead of the $501,000 in damages they requested during closing argument.
II. The Malicious Prosecution Case
In January 2021, appellants filed a complaint against Lian Tong and
Horner Law for malicious prosecution based on the filing and continued
prosecution of Lian Tong’s cause of action for breach of the BW contract.
Appellants allege that Lian Tong’s breach of contract claim was not
supported by probable cause because there was no basis for disputing that:
Lian Tong had the contractual duty to obtain all approvals for the restaurant
project; Lian Tong did not obtain approval from the Palms until January
2015; and six months from that approval date had not passed when Lian
Tong terminated the BW contract.

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 Appellants also allege that Lian Tong attempted to manufacture
probable cause to sue appellants by suppressing evidence that it had not
obtained approval for its project when the BW contract was executed, and by
purporting to rely on an approval letter from the Palms that was dated
January 5, 2014, despite knowing that the letter was misdated, as the Palms
did not actually approve the project until January 5, 2015. Appellants allege
that they did not discover the letter was misdated until October 2018, when
Veronica Nguyen was deposed on behalf of the Palms. After Nguyen’s
deposition, respondent Dooley allegedly became “frantic,” and respondents
subsequently served a statutory offer to compromise Lian Tong’s claim
against appellants in exchange for a waiver of costs. Appellants characterize
the offer to compromise as “an acknowledgement” that Lian Tong’s claim
against appellants was “objectively baseless, fabricated, groundless,
meritless, unsupported, and untenable.”
Appellants allege further that the underlying action was filed for an
improper purpose. Lian Tong’s alleged purpose was “pay back,” because Lian
Tong’s owner, respondent Liu, believed that appellants had stolen the BW
contract funds and abandoned the restaurant project. And Horner Law
allegedly pursued the claim because they wanted “exorbitant attorneys’ fees
and bills.”
In April 2021, Horner Law filed a special motion to strike appellants’
complaint (§ 425.16), arguing the malicious prosecution claim challenges
activity protected by the anti-SLAPP statute and there is no probability
appellants’ will prevail on their claim at trial. The trial court agreed, and
granted Horner Law’s motion. Subsequently, Lian Tong filed their anti-
SLAPP motion, making essentially the same arguments Horner Law made.
After the court granted Lian Tong’s motion, Horner Law and Lian Tong filed

10
motions for attorney fees and costs. (§ 425.16, subd. (c)(1).) Both motions
were granted. Horner Law was awarded $115,577.30 and Lian Tong was
awarded $45,031.
DISCUSSION
Appellants contend the trial court erred by granting the anti-SLAPP
motions, and for that reason alone the attorney fee orders must also be
reversed.
I. Standards Governing Anti-SLAPP Motions
Section 425.16 authorizes a special motion to strike a cause of action
arising from an act in furtherance of the defendant’s constitutional right of
petition or free speech in connection with a public issue. (§ 425.16, subd. (b).)
“The purpose [of the statute] is to curtail the chilling effect meritless lawsuits
may have on the exercise of free speech and petition rights, and the statute is
to be interpreted broadly to accomplish that goal. (§ 425.16, subd. (a).)”
(Schaffer v. City and County of San Francisco (2008) 168 Cal.App.4th 992,
998.) To resolve an anti-SLAPP motion, the trial court engages 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 (Equilon).)
Appellants concede that respondents made a threshold showing that
the anti-SLAPP statute applies in this case. A “cause of action [for] malicious
prosecution arises from an underlying lawsuit and involves allegations that
the defendant committed a tort by engaging in the underlying action.”
(Neurelis, Inc. v. Aquestive Therapeutics, Inc. (2021) 71 Cal.App.5th 769, 784

11
(Neurelis).) Thus, malicious prosecution claims “fall within the purview of
the anti-SLAPP statute.” (Jarrow Formulas, Inc. v. LaMarche (2003) 31
Cal.4th 728, 735 (Jarrow).)
Under the second step of the section 425.16 inquiry, appellants had the
burden to produce evidence of a probability of prevailing on their claim.
(Equilon, supra, 29 Cal.4th at p. 67.) To meet that burden, they were
required to establish that their malicious prosecution claim “ ‘ “is both legally
sufficient and supported by a sufficient prima facie showing of facts to
sustain a favorable judgment” ’ ” if their evidence is credited. (Vargas v. City
of Salinas (2009) 46 Cal.4th 1, 19–20.)
“A claim for malicious prosecution requires that the plaintiff
demonstrate (1) the defendant brought (or continued to pursue) a claim in the
underlying action without objective probable cause, (2) the claim was pursued
by the defendant with subjective malice, and (3) the underlying action was
ultimately resolved in the plaintiff's favor.” (Lane v. Bell (2018) 20
Cal.App.5th 61, 67.) Here, the trial court found that appellants failed to
make a sufficient prima facie showing to establish the first two elements of
this claim. We independently review the trial court’s findings on appeal.
(Rusheen v. Cohen (2006) 37 Cal.4th 1048, 1056.)
II. Probable Cause
“ ‘An action is deemed to have been pursued without probable cause if it
was not legally tenable when viewed in an objective manner as of the time
the action was initiated or while it was being prosecuted.’ ” (Neurelis, supra,
71 Cal.App.5th at p. 800.) This inquiry “ ‘calls on the trial court to make an
objective determination of the “reasonableness” of the defendant’s conduct.’ ”
(Parrish v. Latham & Watkins (2017) 3 Cal.5th 767, 776 (Parrish).) It is not
sufficient to establish that the prior claim was “ ‘ultimately found to lack

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merit.’ ” (Neurelis, at p. 800.) The prior claim is “unsupported by probable
cause only if ‘ “ ‘any reasonable attorney would agree [that it is] totally and
completely without merit.’ ” ’ [Citations.] ‘This rather lenient standard for
bringing a civil action reflects “the important public policy of avoiding the
chilling of novel or debatable legal claims.” ’ [Citation.] The standard
safeguards the right of both attorneys and their clients ‘ “ ‘to present issues
that are arguably correct, even if it is extremely unlikely that they will
win.’ ” ’ ” (Parrish, at p. 776.)
Applying these principles, we affirm the finding that Lian Tong’s
breach of contract claim against appellants was legally tenable. The BW
contract stated that work would commence once the owner provided approved
permits and drawings, without identifying any specific permit or drawing or
delineating what approvals were required. The contract required Lian Tong
to provide the “approved & stamp[ed] plan,” but it did not define this
handwritten term that was added to the typed contract, or otherwise address
who was responsible for obtaining approval from the Palms to start
construction work at the site of the restaurant project. Thus, the language of
the contract did not foreclose Lian Tong’s theory that they were required to
provide BW Construction with copies of the preliminary architectural plans
and designs that had been approved by the city, and that any subsequent
approval, such as authorization from the Palms, would be secured by the
contractors.
Moreover, Lian Tong had evidence to support their theory. In 2013, the
city approved Lian Tong’s preliminary construction plans and issued permits
authorizing work to begin.3 Prior to execution of the BW contract, Lian Tong

3 Appellants have filed two requests for judicial notice of documents
pertaining to an application for an additional building permit that was dated

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architect Derrick Wu discussed the project with a representative of the Palms
who stated that the Palms did not oppose the project. And, after the BW
contract was executed, Y.F. Liu told Liu that Chen had agreed to obtain
formal approval from the Palms. Other witnesses who had been involved in
the project testified that they too believed that Chen was responsible for
obtaining approval from the Palms, including Palms representative Victoria
Nguyen. There was also evidence that Chen did take steps to obtain approval
from the Palms during the period the BW contract was in effect. Under these
circumstances, it cannot be said that all reasonable lawyers would agree that
Lian Tong’s breach of contract claim was totally and completely without
merit.
Appellants argue that evidence that BW Construction had a
contractual obligation to obtain approval from the Palms is irrelevant,
characterizing the issue of who was responsible for obtaining this approval as
a “red herring.” The record of the underlying action shows otherwise. As our
background summary reflects, the pleaded theory in the operative first
amended complaint was that BW Construction and Chen breached the BW
contract by failing to do any work during the period the BW contract was in
effect, which included failing to secure approval from the Palms. Appellants
did not just dispute this claim, they based their cross-complaint on
allegations that it was Lian Tong rather than BW Construction who breached
the BW contract by failing to secure consent for the project from the Palms.

April 8, 2014. These requests are denied for two reasons. First, appellants
are seeking notice of documents that were not before the court that ruled on
the anti-SLAPP motions. (See e.g., Jozefowicz v. Allstate Ins. Co. (2019) 35
Cal.App.5th 829, 837, fn. 4.) Second, appellants fail to show that these
documents are relevant to a material issue on appeal. (See e.g., People ex rel.
Lockyer v. Shamrock Foods Co. (2000) 24 Cal.4th 415, 422, fn. 2.)

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 Appellants insist that the question of who was responsible for obtaining
Palms approval never mattered in the underlying case. They reason that
regardless of who was responsible for obtaining approval from the Palms,
there was no basis for disputing that this necessary approval had not been
secured in time for BW Construction to complete its work within the six-
month contract period. At oral argument before this court, appellants
presented another version of this theory, which posits that Lian Tong lacked
probable cause because there was no basis for disputing that approval of the
final design plans for the restaurant had not been obtained from the City’s
Department of Building Inspection in time for BW Construction to complete
its work within the six-month contract period. These hindsight arguments
are both versions of appellants’ impossibility defense, which resonated with
the trial court and resulted in the directed verdict. But the fact that
appellants were able to prove their defense at trial does not mean there was
no probable cause for the substantively different breach of contract claim
alleged and litigated by Lian Tong, which was that appellants breached the
BW contract not only or specifically because they failed to complete the
project within six months, but because they failed to do any work, including
failing to obtain approval from the Palms.
Appellants offer three reasons why their successful result below
compels a finding that Lian Tong’s breach of contract claim was prosecuted
without probable cause. First, they contend that the directed verdict they
obtained from Judge Lam compels a finding that there was no probable cause
for Lian Tong’s breach of contract claim. Appellants reason that Judge Lam’s
finding that there was no substantial evidence to support a verdict in favor of
Lian Tong at trial proves that Lian Tong’s claim was objectively untenable.
An analogous argument was rejected in Jarrow, supra, 31 Cal.4th 728, which

15
involved a malicious prosecution case that was filed after the underlying case
was dismissed on summary judgment. As the Supreme Court explained, the
fact that an underlying claim was terminated based on a finding of
insufficiency of the evidence does not establish as a matter of law that
probable cause to bring that claim was lacking. (Id. at pp. 742–743.)
“[E]very 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.” (Id. at
p. 743.)
Appellants rely on Puryear v. Golden Bear Ins. Co. (1998) 66
Cal.App.4th 1188, which holds that “probable cause requires evidence
sufficient to prevail in the action or at least information reasonably
warranting an inference there is such evidence.” (Id. at p. 1195, italics
added.) Appellants ignore the second part of this holding, which confirms
that the probable cause analysis is substantively different from the question
whether the underlying claim was ultimately proven by substantial evidence.
(See also Arcaro v. Silva & Silva Enterprises Corp. (1999) 77 Cal.App.4th
152, 156–157 [“probable cause is lacking ‘when a prospective plaintiff and
counsel do not have evidence sufficient to uphold a favorable judgment or
information affording an inference that such evidence can be obtained for
trial’ ”].) Here, for example, Lian Tong’s version of the events depended
largely on Y.F. Liu, as he negotiated the BW contract on their behalf. Lian
Tong also relied on expert testimony to support its theory that BW
Construction was responsible for obtaining approval from the Palms. It was
not until the case went to trial that it became clear that Y.F. Liu’s testimony

16
would be excluded, and that Derrick Wu would not be qualified as an expert
regarding the responsibilities of a contractor. These facts provide additional
support for concluding that Lian Tong’s claim was supported by probable
cause.
Appellants’ second theory is that respondents are collaterally estopped
from disputing that the underlying breach of contract claim was unsupported
by probable cause. The same theory was rejected in Plumley v. Mockett
(2008) 164 Cal.App.4th 1031, 1049, which we follow here. Collateral estoppel
precludes re-litigation of an issue only if it is “ ‘identical’ ” to an issue that
was previously litigated and actually and necessarily decided on the merits in
a prior proceeding. (Id. at pp. 1048–1049.) The issue whether probable cause
supported Lian Tong’s breach of contract claim was neither litigated nor
necessarily decided in the underlying action.
Finally, appellants contend that a finding of probable cause cannot be
based on the evidence that Lian Tong relied on in the underlying litigation
because, when the court rules on an anti-SLAPP motion, all conflicts in the
evidence must be resolved in favor of the plaintiff. (Citing Lee v. Kim (2019)
41 Cal.App.5th 705.) “[I]n the ‘summary-judgment-like procedure’ of a
special motion to strike we do not weigh evidence or resolve conflicting
factual claims. [Citations.] We further must draw all reasonable inferences
from the evidence in favor of . . . the plaintiff.” (Id. at p. 720.) But contrary
to appellants’ contentions, these principles do not preclude us from
considering the evidence Lian Tong relied on below. Indeed, that is the very
inquiry we must undertake to conduct a probable cause inquiry. To put the
matter another way, by confirming the trial court’s finding that some
evidence supported Lian Tong’s breach of contract claim, we are neither
crediting that evidence nor resolving conflicting factual claims. We are

17
simply recognizing that a reasonable attorney could find that Lian Tong’s
claim was not totally and completely without merit. (Parrish, supra,
3 Cal.5th at p. 776.)
Appellants make lengthy arguments about why their evidence in the
underlying action, when considered in isolation and viewed favorably to
them, doomed Lian Tong’s breach of contract claim. These arguments do not
alter our conclusion because the issue here is not whether appellants were
entitled to a favorable judgment in the underlying case. The issue is whether
Lian Tong’s claim was objectively untenable and, as discussed, they had
evidence to support their pleaded theory. Thus, we affirm the trial court’s
finding that appellants fail to carry their burden of proving that Lian Tong’s
breach of contract case was prosecuted without probable cause.
III. Malice
“The ‘malice’ element of the malicious prosecution tort relates to the
subjective intent or purpose with which the defendant acted in initiating the
prior action.” (Sheldon Appel Co. v. Albert & Oliker (1989) 47 Cal.3d 863,
874.) “The motive of the defendant must have been something other than
that of bringing a perceived guilty person to justice or the satisfaction in a
civil action of some personal or financial purpose. [Citation.] The plaintiff
must plead and prove actual ill will or some improper ulterior motive.”
(Downey Venture v. LMI Ins. Co. (1998) 66 Cal.App.4th 478, 494, italics
omitted; Soukup v. Law Offices of Herbert Hafif (2006) 39 Cal.4th 260, 292
[quoting Downey].) Facts showing that a prior claim was filed without
probable cause may support an inference of malice. (Soukup, at p. 292;
Downey, at p. 498, fn. 29.) But “the absence of probable cause alone is
insufficient to establish a prima facie case of malice.” (Roche v. Hyde (2020)
51 Cal.App.5th 757, 826–827.) “ ‘In other words, the presence of malice must

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be established by other, additional evidence,’ ” and must “ ‘include proof of
either actual hostility or ill will on the part of the defendant or a subjective
intent to deliberately misuse the legal system for personal gain or
satisfaction at the expense of the wrongfully sued defendant.’ ” (HMS
Capital, Inc. v. Lawyers Title Co. (2004) 118 Cal.App.4th 204, 218.)
Applying these principles, we affirm the trial court’s finding that
appellants fail to make a prima facie showing of malice as to either set of
respondents. Appellants unsuccessfully rely on the rule that malice can be
inferred from the absence of probable cause because, as explained, they fail to
show that Lian Tong’s breach of contract claim was unsupported by probable
cause. Moreover, appellants produce no additional evidence to show that
either Lian Tong or Horner Law had an improper motive for bringing the
prior action.
Appellants contend that respondent Liu’s trial testimony in the
underlying action constitutes evidence of Lian Tong’s malice. Specifically,
appellants rely on testimony by Liu that he made the decision to sue
appellants because he believed they had stolen contract funds and abandoned
the project, which made him angry. Testimony to this effect would show that
Liu was angry at appellants because he genuinely believed they breached the
BW contract, which is not evidence of a nefarious motive unrelated to a
legitimate litigation purpose.
Appellants also argue that malice can be inferred from respondents’
failure to conduct a factual investigation before filing the underlying action,
citing Citizens of Humanity, LLC v. Hass (2020) 46 Cal.App.5th 589, 607–
608. In that case, a jeans manufacturer (Citizens) obtained a dismissal with
prejudice of a class action lawsuit alleging that Citizens engaged in an unfair
business practice by mislabeling its jeans, and then filed a malicious

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prosecution action against two class representatives and the attorneys who
filed the underlying action. (Id. at pp. 593 & 595.) A special motion to strike
Citizens’ complaint was denied because Citizen’s evidence was sufficient to
establish a probability of prevailing on the merits as to each element of the
malicious prosecution claim. (Id. at p. 597.) Prima facie proof of malice
included evidence that the underlying lawsuit was filed on behalf of a “shill
plaintiff,” for the improper purpose of forcing a settlement that was not
related to the merits of the claim, and that attorneys filed the action without
investigating the factual claims of the class representatives. (Id. at pp. 606–
607.) We find no comparable evidence of malice in this record.
Appellants use perceived weaknesses in Lian Tong’s breach of contract
case to infer that an adequate investigation was not conducted. We are not
persuaded by these convoluted arguments. For example, appellants contend
that during trial in the prior action, Liu admitted he did not have personal
knowledge about the negotiations that culminated in the 2015 termination
contract, and that this so called admission is proof that Lian Tong filed the
underlying action without knowing the true facts. We disagree. Liu relied on
an agent (his father) to negotiate the contracts, a circumstance that does not
strike us as remarkable or uncommon, and that does not support a
reasonable inference of malice. Appellants also posit that Horner Law “did
not discuss” or “investigate any of the case facts” with their clients. But they
cite no evidence to prove these accusations, which are contradicted by
attorney declarations that were filed in support of the anti-SLAPP motions.
Taking a different tack, appellants contend that respondents did know
the true facts, and yet knowingly presented false ones, thus showing their
malice. Appellants cite Nunez v. Pennisi (2015) 241 Cal.App.4th 861, which
states that malice can be found when “a plaintiff ‘asserts a claim with

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knowledge of its falsity.’ ” (Id. at p. 877, italics omitted.) Appellants attempt
to invoke this rule by contending that Lian Tong’s original complaint “falsely
alleged construction was required to be completed by October 2014.” First,
the original complaint contained no allegation to the effect that the BW
contract required that construction be completed by October 2014. Rather,
Lian Tong alleged that “[t]he parties agreed and understood that pursuant to
the terms of the [BW contract], the Project was to be completed within six
months or approximately by early October 2014.” Moreover, the BW contract
was attached and incorporated into the original complaint, thus undermining
appellants’ apparent theory that Lian Tong somehow misrepresented what
the contract actually said.
Appellants also contend malice can be inferred from alleged discovery
abuses by respondents, citing Roche v. Hyde, supra, 51 Cal.App.5th 757.
That malicious prosecution action was filed after termination of a lawsuit
arising out the sale of Roche’s winery to Ram’s Gate. In the underlying
litigation, Ram’s Gate alleged that Roche was liable for breach of contract
and fraud for withholding a seismic report that materially impacted the value
of the winery, but dismissed its action after evidence emerged that the report
had been disclosed to Ram’s Gate attorney Hyde prior to the sale, and that
Ram’s Gate had violated multiple discovery orders by suppressing this fact.
In Roche’s malicious prosecution action, the appellate court affirmed orders
denying anti-SLAPP motions filed by Ram’s Gate and Hyde. (Id. at p. 769.)
In Roche v. Hyde, supra, 51 Cal.App.5th 757, the two primary issues on
appeal were whether the winery litigation terminated in Roche’s favor and
whether Ram’s Gate lacked probable cause to bring it, but the court also
rejected attorney Hyde’s contention that Roche failed to make a prima facie
showing of malice. Roche v. Hyde confirms the general principle that lack of

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probable cause can raise an inference of malice but that the absence of
probable cause alone is insufficient to establish a prima face case of malice.
(Id. at pp. 826–827.) Roche’s additional evidence of malice consisted of “a
pattern of discovery misconduct and the manner in which it was carried out.”
(Id. at p. 827.) Specifically, Roche showed that the Ram’s Gate parties had
deliberately withheld the seismic report in direct violation of multiple
discovery orders under circumstances that amounted to fraudulent
concealment. (Id. at p. 812.)
Unlike the Roche v. Hyde plaintiff, appellants fail to show that the
underlying claim against them was not supported by probable cause. Nor do
they provide additional evidence of malice demonstrated through discovery
misconduct. Instead, they misconstrue discovery disputes by portraying
them as discovery abuse. For example, appellants attempt to infer malice
from the fact that Lian Tong failed to produce Y.F. Liu for a deposition. But
appellants’ motion to compel Y.F. Liu’s deposition was denied. Moreover, the
in limine order precluding Y.F. Liu from testifying at trial via Skype was not
based on a finding that Lian Tong engaged in misconduct, but that Y.F. Liu
was an unavailable witness. Further, appellants likely benefited from Y.F.
Liu’s unavailability, as Lian Tong sought to rely on his account of discussions
with Chen. Appellants ignore all of these pertinent facts, which undermine
their theory that the failure to produce Y.F. Liu is proof of malice.
Finally, appellants contend that malice can be inferred from evidence
that Horner Law attempted to coerce a settlement from appellants after it
became clear that Lian Tong’s breach of contract claim was without merit.
Appellants base this claim on Golden State Seafood, Inc. v. Schloss (2020) 53
Cal.App.5th 21, which is factually inapposite but confirms the general rule
that malice can be inferred from continued prosecution of an action after a

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plaintiff becomes aware that its action lacks probable cause. (Id. at p. 38.)
Golden State Seafood also confirms the principle that an inference of malice
must be supported by some evidence in addition to a lack of probable cause.
(Ibid.) In that case, there was evidence that the underlying lawsuit was filed
for the purpose of securing a settlement unrelated to the merits of the case.
(Id. at pp. 38–39.)
Here, appellants contend that malice can be inferred from a May 23,
2019, confidential settlement communication Horner Law sent to appellants’
counsel. In that letter, Horner Law proposed settling the entire dispute
between the parties in exchange for mutual releases. As support for the
proposal, Horner Law relied primarily on the fact that the superior court had
just granted Lian Tong judgment on the pleadings with respect to appellants’
first amended cross-complaint. Horner Law also argued that because
appellants had demanded attorney fees in connection with their unsuccessful
contract claims, Lian Tong could also demand fees incurred in defeating those
claims, even absent an attorney fee clause. And Horner Law pointed out that
appellants had yet to pay financial sanctions that had been imposed against
them for their discovery violations.
Appellants argue that Horner Law’s May 2019 settlement offer is
evidence of malice because when the offer was made, Horner Law knew that
(1) their client’s case was totally lacking in merit, and (2) there was no legal
basis for claiming attorney fees against appellants. Both prongs of this
argument are flawed.
First, appellants contend that Horner Law had known since October
2018 that their client’s case was totally lacking in merit. According to this
argument, when appellants took the deposition of Palms representative
Veronica Nguyen, Lian Tong’s entire case fell apart because Nguyen’s

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testimony established that the Palms had not approved the restaurant
project until January 2015. This fact was dispositive, appellants contend,
because respondents “could no longer take the objectively baseless position
[that] appellants breached the restaurant construction contract by failing to
complete construction by October 2014.” This argument conflates Lian
Tong’s breach of contract claim with appellants’ impossibility defense. Lian
Tong’s claim was that appellants breached the BW contract by taking Lian
Tong’s money and never doing any work on the project, not by failing to
complete the entire project within six months of the date that the contract
was executed.
The second part of appellants’ argument is that malice can be inferred
from the May 2019 settlement offer because Horner Law knew they had no
legitimate basis for threatening to seek attorney fees from appellants if the
case was not settled. Apparently, Horner Law’s claim that it could seek
attorney fees was based on a misreading of Civil Code section 1717. But this
legal error does not mean their confidential settlement offer supports an
inference of malice.
The record shows that the May 2019 letter was sent shortly after Lian
Tong obtained favorable rulings on its motions for judgment on the pleadings
and/or to strike appellants’ first amended cross-claims. Thus, the settlement
proposal offered appellants an opportunity to end the litigation without
incurring the expense of revising their own theories and having to defend
against a viable breach of contract claim. Regardless of whether the
“threat[]” to seek attorney fees was objectively sound, it appears that the May
2019 settlement offer was based on Horner Law’s subjective assessment of
the value of appellants’ claims at that point in the litigation. Appellants fail
to point to any other evidence that would support an inference of malice.

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IV. The Attorney Fees Orders
Appellants do not separately address the orders granting respondents
attorney fees. Their sole contention is that these orders must be reversed
because the anti-SLAPP motions should not have been granted. As
explained, appellants fail to show that the trial court erred by granting
respondents’ special motions to strike appellants’ malicious prosecution
claim.
“Section 425.16, subdivision (c) authorizes an award of attorney fees
and costs to the prevailing party. Further, the right of a prevailing defendant
to recover attorney fees and costs adequately compensates him for ‘the
expense of responding to a baseless lawsuit.’ ” (Conroy v. Spitzer (1999) 70
Cal.App.4th 1446, 1454–1455.) Respondents are the prevailing defendants
on the special motions to strike and, therefore, their motions for attorney fees
were properly granted. (§ 425.16, subd. (c).)
DISPOSITION
Appellants filed four separate appeals from the orders granting the
special motions to strike and awarding respondents attorney fees, which were
consolidated in this court. The appealed orders are all affirmed.
Respondents are awarded costs on appeal.

TUCHER, P.J.

WE CONCUR:

PETROU, J.
RODRÍGUEZ, J.

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Bing Wu et al. v. Lian Tong, LLC, et al. (A163131/A163455/A163635/A163768)

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