I respectfully dissent.
Public officials in this state are subject to a myriad of inconvenient limitations on their power to tax and spend. Today those limitations are weaker than they were yesterday. With no pertinent authority supporting its position, with controlling authority clearly contrary to its holding, the majority permits citizens to be sanctioned and held liable for malicious prosecution where they unsuccessfully attempt to enforce one or more of those limitations. Following today’s holding only the bravest and wealthiest will dare challenge the way a public agency has interpreted its powers. The majority compounds this error by allowing a malicious prosecution action to be brought by a private party with substantial interests in a citizen complaint against a government entity, thus creating an unprecedented categorical exception to the doctrine of petition immunity.
I
PROBABLE CAUSE
However Bruce Henderson may be perceived by his adversaries, whatever his subjective intentions might be, he had probable cause to bring Currie v. City of San Diego (Super.Ct. San Diego County, 2000, No. GIC743443 (Currie). He was therefore not subject to sanction or liability in tort.
A
As the majority acknowledges, in the context of liability for malicious prosecution, litigants are given the benefit of a very generous probable cause standard. (Maj. opn., ante, at pp. 516-518.) The standard, described by the court in Roberts v. Sentry Life Insurance (1999) 76 Cal.App.4th 375, 382 [90 Cal.Rptr.2d 408], bears repeating: “Reasonable lawyers can differ, some seeing as meritless suits which others believe have merit, and some seeing as totally and completely without merit suits which others see as only marginally meritless. Suits which all [orig. italics] reasonable lawyers agree totally lack merit—that is, those which lack probable cause—are the least meritorious of *524all meritless suits. Only this subgroup of meritless suits present no probable cause.” (Italics added; quoted with approval Jarrow Formulas, Inc. v. LaMarche (2003) 31 Cal.4th 728, 743, fn. 13 [3 Cal.Rptr.3d 636, 74 P.3d 737].)
As the majority recognizes, the liberal standard reflects “the important public policy of avoiding the chilling of novel or debatable legal claims.” (Sheldon Appel Co. v. Albert & Oliker (1989) 47 Cal.3d 863, 885 [254 Cal.Rptr. 336, 765 P.2d 498] (Sheldon Appel); see also In re Marriage of Flaherty (1982) 31 Cal.3d 637, 650 [183 Cal.Rptr. 508, 646 P.2d 179].) Indeed, “in evaluating whether or not there was probable cause for malicious prosecution purposes, a court must properly take into account the evolutionary potential of legal principles.” (Sheldon Appel, supra, 47 Cal.3d at p. 886.) Thus, there is probable cause for a claim if it is “arguably ‘warranted by existing law’ or at the very least . . . based on an objectively ‘good faith argument for the extension, modification, or reversal of existing law.’ ” (Real Estate Investors v. Columbia Pictures (1993) 508 U.S. 49, 65 [113 S.Ct. 1920, 123 L.Ed.2d 611], italics added.)1
My colleagues also acknowledge probable cause must be determined by the court as a question of law and that it must be decided on an objective basis. (Maj. opn., ante, at p. 517; Sheldon Appel, supra, 47 Cal.3d at pp. 875, 878.)
B
The majority has not only set out the correct substantive and procedural principles, in discussing Mailhot III it correctly applies those principles. (Maj. opn., ante, at p. 518.) Although I might not go so far as to limit malicious prosecution actions to claims which are “analytically identical” to previously litigated claims, I agree with the majority that such a showing would be sufficient to demonstrate the absence of probable cause. (Maj. opn., ante, at p. 518.) I also agree with the majority that such a showing requires a fairly convincing explanation of how a prior claim foreclosed relitigation of that claim in a later proceeding. (Maj. opn., ante, at p. 519.)
Having correctly described the principles governing malicious prosecution actions and applied them to Mailhot III, the majority then, inexplicably, *525entirely abandons those principles when considering the Currie claim. Without any attempt to find analytical identity, the majority concludes that Henderson had no probable cause to prosecute the Currie claims.
The majority concludes that in light of Rider v. City of San Diego (1998) 18 Cal.4th 1035, 1042-1045 [77 Cal.Rptr.2d 189, 959 P.2d 347], Henderson should have known that the bond ordinance did not violate San Diego City Charter provisions governing annual appropriations. (Maj. opn., ante, at p. 519.) In addition, the majority finds that Henderson should have realized the Padres was not subject to disclosure requirements imposed on parties who obtain property or contract rights from the city. (Maj. opn., ante, at p. 520.) In reaching these conclusions, the majority opinion affords the Currie claims none of the freedom required by Sheldon Appel or provided by the majority itself in considering the Mailhot III claim. Moreover, notwithstanding its articulation of the required procedure, the majority’s Currie discussion strongly suggests probable cause is a subjective matter which will ultimately be determined by a jury.
1. Rider v. City of San Diego
For the majority, the holding in Rider v. City of San Diego should have made it “clear” to Henderson that the city charter claims he advanced in Currie lacked merit. (Maj. opn., ante, at p. 519.) However, as Henderson points out in his petition for rehearing, the majority fails to fully and accurately discuss the claims he advanced in Currie. The majority opinion also fails to consider the nature of the holding in Rider v. City San Diego. Had the majority discussed Henderson’s claims and the holding in Rider v. City of San Diego more thoroughly, it could not have found the clarity its summary approach yields.
Rider v. City of San Diego dealt with the debt limitation provisions of article XVI, section 18 of the California Constitution. Under article XVI, section 18, a local agency may not incur a debt for more than one year without obtaining the consent of two-thirds of the municipality’s voters. In interpreting this provision the court in Rider v. City of San Diego found that a separate financing entity created by a municipality is not subject to section 18’s debt limitation provisions. (Rider v. City of San Diego, supra, 18 Cal.4th at pp. 1042-1044.) In doing so the court conceded that in an earlier case, Rider v. County of San Diego (1991) 1 Cal.4th 1, 11-12 [2 Cal.Rptr.2d 490, 820 P.2d 1000], it had been unwilling to respect the separate identity of similar entities for purposes of interpreting the distinct tax limitation provisions of Proposition 13: “[In Rider v. County of San Diego] [w]e stated that, when a city or county creates and ‘essentially controls]’ a local taxing agency, a court can infer that the agency is a ‘special district’ ‘created to . . . circumvent Proposition 13.’ [Citation.] ... In Rider v. County of San Diego, we expressly *526rejected the conclusion that the essential control standard established the identity of two separate governmental entities: ‘Rather than attempting to demonstrate that the subject agency and county are identical entities, application of the “essential control” test simply affords ground for reasonably inferring an intent to circumvent Proposition 13.’ [Citation.]” (Rider v. City of San Diego, supra, 18 Cal.4th at p. 1044.)
In explaining its willingness to respect the separate identity of a financing agency in applying California Constitution article XVI, section 18, when it was unwilling to do so in applying Proposition 13, the court in Rider v. City of San Diego noted that the terms of the two constitutional provisions were different: section 18 only applies to municipalities, while Proposition 13 also covers special districts. (Rider v. City of San Diego, supra, 18 Cal.4th at p. 1044.) The court also noted that in the case it was considering, the financing agency in fact had a separate existence which would insulate the city from liability, while in the earlier Proposition 13 case, the entity’s “only purpose was to impose the taxes and pass the tax revenues to the county. From both the voters’ and the county’s perspectives, the arrangement was no different than if the county had imposed the taxes directly.” (Ibid.)
In short, the only principle Rider v. City of San Diego makes clear is that there is no clarity with respect to how separate financing agencies will be treated under the myriad of tax and spending limitations which the People have imposed on both state and local governments. Rather, the court’s opinion stands for the proposition that some financing agencies will not be treated as subject to some fiscal limitations and other financing agencies will be subject to other fiscal limitations. (Rider v. City of San Diego, supra, 18 Cal.4th at p. 1044.)
This brings us to the claims asserted by Henderson in the Currie litigation and Rider v. City of San Diego’s potential impact on them. Henderson’s principal contention in Currie was that Proposition C did not permit the city to incur more than $225 million in debt in order to meet its obligations under the memorandum of understanding. Because the bond ordinance permitted $299 million in indebtedness, Henderson argued that it violated the limitation approved by the voters when they adopted Proposition C. In rejecting this argument the trial court found, and we agreed, that as written Proposition C permitted the city to incur a gross debt in excess of $225 million so long as the net amount the city contributed to the ballpark project by the city was limited to $225 million. In doing so neither the trial court nor this court relied upon Rider v. City of San Diego and, as the majority points out, Henderson’s principal claims are not the basis of his potential liability for malicious prosecution.
*527However, as an alternative to his Proposition C claim, Henderson asserted that in adopting the bond ordinance the city had also violated section 84 of the city charter, which requires that all annual expenditures by the city be approved by way of a budget appropriation. Henderson argued that because the bond ordinance authorized the financing agency to incur $299 million in debt, the city had exceeded its own July 1999 appropriation of $225 million for ballpark funding. Both the trial court and this court found that under Rider v. City of San Diego the financing agency was not subject to the appropriation limitation of section 84.
The opinion in Currie is now final and I have no quarrel with the conclusions we reached there. However, two issues bear noting. First, although the city argued in Currie that the debt incurred by the financing agency was not subject to the appropriation requirements of section 84 of the charter, the city did make an appropriation of $225 million in its budget, which the city’s budget stated would come from debt issued by the financing agency. While the city, when challenged, argued that no appropriation was needed for the financing agency’s activities, it nonetheless made an appropriation for those activities. Thus the city’s own conduct would have contributed, in part, to a reasonable attorney’s belief that the financing agency was subject to section 84 of the city charter.
Secondly, the debt limitation discussed in Rider v. City of San Diego is different in important respects from the appropriation limitation in section 84 of the city charter. As we have seen, Rider v. City of San Diego permitted local agencies to avoid the voter approval requirements of California Constitution article, XVI, section 18, because those requirements are not expressly imposed on separate financing agencies and because the separate financing agency it was considering in fact insulated the local agency from debt. Here, City Charter section 84 governs “any obligation for the expenditure of money.” It is quite reasonable to conclude, as we did without a great deal of discussion in Currie, that the language of this provision, like the language considered in Rider v. City of San Diego, does not govern the obligation of any entity other than the city itself. On the other hand, in light of the city’s own conduct in making an appropriation with respect to the funds to be obtained by the financing agency and the fiscal transparency which is an obvious and important goal of section 84, a lawyer might reasonably conclude that Rider v. City of San Diego does not apply to the appropriation requirements of the city charter. A reasonable attorney might conclude that given the fact the city was not likely to permit one of its agencies to default on the bonds, those bonds had to be accounted for by way of an appropriation in its annual budget. Importantly, there is nothing in Rider v. City of San Diego itself which forecloses such a novel argument.
*528Because of the obvious differences between the constitutional provisions considered by the court in Rider v. City of San Diego and section 84 of the city charter, Henderson cannot be fairly accused of doing more than making an “objectively ‘good faith argument for the extension, modification, or reversal of existing law.’ ” (Professional Real Estate Investors, Inc. v. Columbia Pictures Industries, Inc., supra, 508 U.S. at p. 65.) Until today, he could do so free of any liability for malicious prosecution or sanctions. (See Sheldon Appel, supra, 47 Cal.3d at p. 885; In re Marriage of Flaherty, supra, 31 Cal.3d at p. 650.)
The absence of any meaningful discussion in the majority opinion of the nature of Henderson’s argument or of the facts and reasoning in Rider v. City of San Diego, upon which the majority relies in finding Henderson potentially liable in tort (maj. opn., ante, at p. 519), strongly suggests the majority believes a fuller discussion is unnecessary at this point because it will be for the trier of fact to make the final probable cause determination. The perception my colleagues create that the trier of fact has some role in determining probable cause on a subjective basis is confirmed by its reference to a “prima facie showing” of probable cause. (Maj. opn., ante, at p. 519.) Under Sheldon Appel probable cause is not a matter of presenting a prima facie case to a judge and then letting a jury make the final determination as to whether a claim was justified. As the majority itself recognizes, under Sheldon Appel the court is the final arbiter of probable cause and the issue is to be decided without regard to a defendant’s subjective beliefs.
2. Charter Section 225
With respect to Henderson’s contention the Padres was subject to city charter section 225, Henderson’s position is simpler and stronger. Section 225 mandates disclosure of the interests of all persons “applying or bargaining therefor” (italics added) property or contract rights from the city. There was not, until our opinion in Currie was filed, any definitive interpretation of the city charter section 225. Arguably the Padres, given its direct interest in the transaction, could be considered a person who “bargained for” the bond ordinance. Until we rejected such a broad interpretation in Currie, it can hardly be said that no reasonable attorney would have argued that the Padres was subject to city charter section 225. Again, Henderson acted well within the necessarily broad confines of probable cause.
In finding potential malicious prosecution liability in the absence of any governing authority with respect to the ambiguous terms of city charter section 225, the majority has, as a practical matter, equated Henderson’s lack of success with the absence of probable cause. This of course is precisely what Sheldon Appel forbids.
*529II
PETITION IMMUNITY
In addition to my disagreement with the majority’s probable cause holding, I also disagree with the broad categorical exception to petition immunity my colleagues have created for private parties who have a substantial interest in underlying litigation in which a government policy was challenged. (Maj. opn., ante, at pp. 511-512.)
A
The history of our right-to-petition jurisprudence consists of plaintiffs who were in precisely the same position as the Padres. In Eastern Rail Pres. Conf. v. Noerr Motor Frgt., Inc. (1961) 365 U.S. 127 [81 S.Ct. 523, 5 L.Ed.2d 464] (Noerr), United Mine Workers v. Pennington (1965) 381 U.S. 657 [85 S.Ct. 1585, 14 L.Ed.2d 626], California Motor Transport Co. v. Trucking Unlimited (1972) 404 U.S. 508 [92 S.Ct. 609, 30 L.Ed.2d 642] (California Transport), Blank v. Kirwan (1985) 39 Cal.3d 311 [216 Cal.Rptr. 718, 703 P.2d 58] and Real Estate Investors v. Columbia Pictures, supra, 508 U.S. 49 private plaintiffs, like the Padres, argued that a defendant had petitioned the government in one fashion or another and in doing so caused them substantial harm. In each of those cases it was undisputed the plaintiffs were substantially interested in the underlying legislative, executive or judicial proceeding. Nonetheless, in all of those cases the courts had no difficulty finding that notwithstanding the private status of the plaintiffs, the defendants were protected by the right to petition. Given this history, the Padres’ status as a private party should not, by itself, deprive Henderson of his right-to-petition immunity.
Contrary to the suggestion in the majority opinion, nothing in City of Long Beach v. Bozek (Bozek) (1982) 31 Cal.3d 527, 533-535 [183 Cal.Rptr. 86, 645 P.2d 137], supports a categorical exception to right-to-petition immunity. In Bozek the court extended right-to-petition immunity to citizens who have unsuccessfully sued governmental agencies for damages in tort. In Bozek the plaintiff sued the city and two of its police officers for false imprisonment, false arrest, negligent hiring, assault and battery. The suit was unsuccessful and the city brought a malicious prosecution action against the plaintiff. In finding that a malicious prosecution action brought by a governmental agency would unduly interfere with the right to petition, the court stated: “It is essential to protect the ability of those who perceive themselves to be aggrieved by the activities of governmental authorities to seek redress through all the channels of government. A tort action against a municipality is but one of the available means of seeking redress. If cities are permitted to *530bring malicious prosecution actions against those who have unsuccessfully sued them, the institution of legitimate as well as baseless legal claims will be discouraged. The elements of malicious prosecution, though difficult to prove, are easily alleged. [Citations.] Allowing cities to sue for malicious prosecution against unsuccessful former plaintiffs would provide the municipalities with a sharp tool for retaliation against those who pursue legal actions against them. Indeed, it is not unlikely that even good faith claimants would forego suit in order to avoid the possibility of having to defend against a subsequent malicious prosecution action should their action against the city prove unsuccessful.” (Id. at pp. 535-536.)
In making citizens immune from malicious prosecution actions brought by government agencies, the court also relied on the fact that the agencies could recover their litigation costs and deter frivolous lawsuits by seeking and obtaining sanctions under Code of Civil Procedure section 128.5. (Bozek, supra, 31 Cal.3d at p. 535.)
The court in Bozek however was careful to limit its holding to claims made by governmental agencies themselves. The individual police officer’s claims were not before the court and with respect to those claims the court stated “such suits are different from suits by governmental entities themselves in at least two important ways: First, police officers have an interest in recovering damages for harm to their reputations and for emotional distress caused by lawsuits alleging improper conduct on their part. Second, suits by police officers do not necessarily raise the specter of a retaliatory policy designed to discourage legitimate exercise of the right to petition through the courts. Although this case does not present the issue, it is conceivable that suits brought by individual police officers might require that a different balance be struck between the right of petition and the tort policies underlying the malicious prosecution cause of action.” (Bozek, supra, 31 Cal.3d 538, fn. 9, italics added.)
As indicated by the court in Bozek, in determining whether a private party plaintiff is subject to the right to petition, we should look at the nature of the interest being asserted by the plaintiff and consider whether litigation by the plaintiff would raise the specter of retaliation designed to discourage exercise of the right to petition through the courts. In the case of the individual police officers who had been sued for false arrest, the court noted their unique interest in their reputations and the distress they suffered. Given the dignity interests implicated by the claims made against them, the need for a tort remedy could be very real. Moreover, the individual actions which were the genesis of the underlying litigation against the officers did not necessarily implicate any policymaking by the city such that litigation by the officers would suggest retaliation by the city itself. Indeed, the plaintiffs did not need *531to bring individual claims against the officers to proceed against the city, nor did they need to bring claims against the city in order to pursue individual claims against the officers.
Here, we have a quite different situation. The Padres does not fall within the category of individuals Bozek opines might maintain a malicious prosecution action. Although the Padres may have suffered damage apart from the city and in addition to the litigation costs it incurred, those damages were in the nature of consequential contract damages, the risk of which was known by both the city and the Padres at the time they reached the ballpark agreements. Thus unlike the injuries the police officers suffered, the Padres could have negotiated with the city with respect to allocation of the risk of litigation challenging the agreements and protected itself from loss. Thus the need for a tort remedy here is not as apparent as in the case of the police officers. Moreover, because Henderson was challenging, as unlawful, the city’s decision to enter into the ballpark agreements with the Padres, there was no means by which Henderson could challenge the city’s policy decision without implicating the Padres’s interests. Given the fact that the city’s policy decision and the Padres’s interests were inextricably bound together, any tort liability imposed for that challenge does in fact raise the specter of retaliation against Henderson for the exercise of First Amendment rights. In this regard the impact of our decision on the ability of citizens to challenge the activities of their government cannot be overstated. The reality of modem municipal government is that governing bodies make many of their most important policy decisions by way of agreements with or affecting private parties. The decision to finance a major public works project, which was the subject of Henderson’s challenge, was in no sense unusual for the city of San Diego or any other municipality. Its impact on the community, for good or ill, will be felt for many years to come. We should not, by way of permitting an affected party to bring a malicious prosecution action, discourage citizens from challenging such important policy decisions.
B
Instead of creating an unprecedented exception to the scope of the right of petition, we would be far better served by confining ourselves to the narrower “sham” exception to petition immunity which has already been articulated in case law. (See Noerr, supra, 365 U.S. at p. 144; California Transport, supra, 404 U.S. at p. 513; City of Columbia v. Omni Outdoor Advertising (1991) 499 U.S. 365, 380 [111 S.Ct. 1344, 113 L.Ed.2d 382]; Blank v. Kirwan, supra, 39 Cal.3d at p. 322.)
The sham exception is governed by a two-part test. “First, the lawsuit must be objectively baseless in the sense that no reasonable litigant could realistically expect success on the merits. If an objective litigant could conclude that *532the suit is reasonably calculated to elicit a favorable outcome, the suit is immunized under Noerr, and an antitrust claim premised on the sham exception must fail. Only if challenged litigation is objectively meritless may a court examine the litigant’s subjective motivation. Under this second part of our definition of sham, the court should focus on whether the baseless lawsuit conceals ‘an attempt to interfere directly with the business relationships of a competitor,’ [citation] through the ‘use [of] the governmental processas opposed to the outcome of that processas opposed to the outcome of that processan anticompetitive weapon,’ [citation]. This two-tiered process requires the plaintiff to disprove the challenged lawsuit’s legal viability before the court will entertain evidence of the suit’s economic viability.” (Real Estate Investors v. Columbia Pictures, supra, 508 U.S. at pp. 60-61, fn. omitted.)
Although in Blank v. Kirwan the court discussed the sham exception, it did not apply it. In Hi-Top Steel Corp. v. Lehrer (1994) 24 Cal.App.4th 570 [29 Cal.Rptr.2d 646], the court did apply the exception. In explaining the sham exception, the court stated “ ‘[t]he sham exception . . . reflects a judicial recognition that not all activity that appears as an effort to influence government is actually an exercise of the first amendment right to petition. At times this activity, disguised as petitioning, is simply an effort to interfere directly with a competitor. In that case, the “sham” petitioning activity is not entitled to first amendment protection, because it is not an exercise of first amendment rights. ’ [Citation.] If defendants are simply attempting to interfere with a competitor, not genuinely attempting to petition the government for redress of grievances, then imposing liability for their actions does not interfere with their state constitutional ‘right to . . . petition government for redress of grievances.’ ” (Id. at p. 578.) However “ ‘. . . a plaintiff must do more than merely allege that a defendant’s petitioning activity was a sham in order to overcome the First Amendment privilege. Otherwise, the right to petition without fear of sanctions would become a mockery. The ‘sham’ exception cannot be used to chill this constitutional right. [Citations.] [Plaintiff], therefore, must allege facts that demonstrate that defendants’ complaints . . . were merely a ruse and that defendants were not truly seeking favorable governmental action. . . .’ ” (Id. at. p. 581.) Suffice it to say, neither the objective nor subjective requirements of the sham exception have been met in this case.
III
Respectfully, I believe the consequences of the majority’s holding with respect to the Currie claim are staggering.
As I noted at the outset, all government public institutions in this state must conduct themselves within the limits set forth by the people in various *533forms, from city charter provisions, such as section 225, to amendments to our state Constitution, such as Proposition 13. As Rider v. City of San Diego and Rider v. County of San Diego demonstrate, until today those limitations were often the subject of fiercely conflicting interpretations. The majority, however, has gone a long way in eliminating these conflicts: in a very powerful fashion, my colleagues have discouraged citizens from ever arguing with the government over limitations on its powers. Although the Currie claims were in no definitive manner barred by either Rider v. City of San Diego or the provisions of the city charter, the majority has nonetheless found that in pursuing Currie Henderson acted without probable cause. Given this holding it would be pure folly for any citizen or citizens group to challenge any government action. If they are unsuccessful, their opponents will surely ignore the majority’s disposition of the Maillhot III claim and, relying on the Currie holding, seek sanctions and recovery in tort if a private party is involved.
In discouraging citizens from attempting to enforce limitations on government action, I think the majority has made a serious mistake. I would submit that as a general proposition our laws embody the principle that as a people we are far better off with citizens who feel free to challenge government leaders than with government leaders who feel free to ignore the restraints we have placed on them.
A petition for a rehearing was denied January 15, 2004, and the opinion was modified to read as printed above. Benke, J., was of the opinion that the petition should be granted. Appellant’s petition for review by the Supreme Court was denied April 14, 2004. Kennard, J., and Moreno, J., were of the opinion that the petition should be granted.
In Umansky v. Urquhart (1978) 84 Cal.App.3d 368, 372 [148 Cal.Rptr. 547], this court itself rejected the contention that a plaintiff’s attempt to overturn existing precedent would support a related abuse of process claim: “The law, however, is not immutable. It remains in flux to allow for constructive change through the efforts of diligent and conscientious lawyers. It is through legal imagination and ingenuity in pleading that evolution of the law occurs. Whether we examine the law of torts and the development of strict liability for product defect [citation] or family law and the division of retirement benefits as community property [citation], we note the effect of the dynamics of the legal process. Statutes which withstand constitutional challenge in one year may be declared unconstitutional in later years.” (See also Tullai v. Homan (1987) 195 Cal.App.3d 1184, 1188 [241 Cal.Rptr. 255].)