Garcia, et al v. Allstate Insurance

Filing 44

FINDINGS and RECOMMENDATIONS recommending that Defendant's Anti-Slapp Motion and Request for Attorney's Fees 39 be Denied. Matter referred to Judge Ishii; Objections to F&R due within twenty-one (21) days of service of this recommendation; signed by Magistrate Judge Sheila K. Oberto on 1/6/2014. (Timken, A)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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EFRAIN GARCIA, et al.
Plaintiffs,

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Case No. 1:12-cv-00609-AWI-SKO
FINDINGS AND RECOMMENDATIONS
THAT DEFENDANT'S ANTI-SLAPP
MOTION AND REQUEST FOR
ATTORNEY'S FEES BE DENIED

v.
ALLSTATE INSURANCE,

(Docket No. 39)

Defendant.

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OBJECTIONS DUE: 21 days

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_____________________________________/

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I.

INTRODUCTION

On June 5, 2013, Defendant Allstate Insurance ("Allstate" or "Defendant") filed a special

21 motion to strike Plaintiffs Efrain Garcia and Ofelia Garcia's (collectively, the "Garcias" or
22 "Plaintiffs") first amended complaint ("FAC") pursuant to California's anti-Strategic Lawsuits
23 Against Public Participation ("anti-SLAPP") statute, California Code of Civil Procedure Section
24 425.16, and a motion for attorney's fees. (Doc. 39.) On June 17, 2013, Plaintiffs, proceeding pro
25 se, filed an opposition to Allstate's motion, and on July 10, 2013, Allstate filed a reply. (Docs. 40,
26 41.) The Court reviewed the motion and supporting documents and determined that this matter
27 was suitable for decision without oral argument pursuant to the Rule 230(g) of Local Rules of the
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1 United States District Court, Eastern District of California; as such, the hearing on the motion was
2 vacated.
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For the reasons set forth below, the Court RECOMMENDS that Allstate's motion be

4 DENIED.
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II.

BACKGROUND

6 A.

Factual Background

7

Plaintiffs' FAC states one cause of action for malicious prosecution and alleges that this

8 action arises out of an automobile accident that occurred on January 4, 2003, and the subsequent
9 subrogation lawsuit wrongfully instituted by Allstate. (Doc. 35.) Plaintiffs allege that a vehicle
10 previously owned by Plaintiffs was involved in a hit and run collision against a vehicle insured by
11 Allstate, and that when the police officers spoke with Plaintiff Efrain Garcia, he reported that he
12 had sold the vehicle six months prior to the accident. (Doc. 35, ¶ 7.) Plaintiffs state that Allstate
13 contacted them in February 2003 and requested information about Plaintiffs' insurance coverage;
14 Plaintiffs informed Allstate that they were not the owners of the vehicle and that they had sold the
15 vehicle in June 2002. (Doc. 35, ¶ 8.) Plaintiffs allege that Allstate made no further contact with
16 Plaintiffs; however, Allstate filed a lawsuit against Plaintiffs for subrogation in the Tulare County
17 Superior Court, case no. PCL104534.

(Doc. 35, ¶ 8-11), The subrogation lawsuit sought

18 reimbursement of the damages Allstate had paid to its insured due to the automobile collision.
19 (Doc. 35, ¶ 9.)
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Plaintiffs allege that, prior to filing the subrogation lawsuit, Allstate had knowledged that

21 Plaintiffs no longer owned the vehicle. (Doc. 35, ¶¶ 10-11.) Plaintiff Ofelia Garcia spoke with
22 Allstate's representative after receiving a request for information regarding insurance coverage.
23 (Doc. 35, ¶ 10.) The police report indicated that Plaintiffs were not the owners of the automobile
24 in question. (Doc. 35, ¶ 10.) Further, the vehicle was sold on June 11, 2002, the title was "file25 stamped" on June 25, 2002, and was processed by the Department of Motor Vehicle ("DMV") on
26 July 19, 2002, supporting Plaintiffs' claim that they were not the owners of the vehicle at the time
27 of the January 4, 2003, accident. (Doc. 35, ¶ 10.) Plaintiffs allege that "[a]fter Plaintiffs verbally
28 provided the sale information to Defendant, Allstate, Defendant still pursued subrogation against
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1 Plaintiffs despite knowledge that Plaintiffs were not the owners of the vehicle at the time of the
2 accident. Allstate filed suit against Plaintiffs on October 19, 2004[,] in Tulare County Superior
3 Court." (Doc. 35, ¶ 11.)
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Plaintiffs allege that they were not served with the complaint and "were unaware of any

5 action being taken against them until they were personally served with an Order to Appear for
6 Examination dated July 23, 2007." (Doc. 35, ¶¶ 12-13.) Upon investigation, Plaintiffs learned of
7 the case against them in Tulare County Superior Court, learned that default judgment had been
8 entered, and were notified by the DMV that their licenses would be suspended as of October 1,
9 2007.

(Doc. 35, ¶ 13.)

Plaintiff Efrain Garcia's employer was served with an "Earnings

10 Withholding Order for Wage Garnishment" by Allstate on September 17, 2008. (Doc. 35, ¶ 13.)
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Plaintiffs filed a motion to set aside and vacate the default and default judgment in the state

12 court subrogation suit on July 8, 2008. (Doc. 35, ¶ 15.) On October 14, 2008, the motion was
13 granted by the Tulare County Superior Court; however, the judge "only signed one order, on
14 behalf of Plaintiff Ofelia Garcia[,] and inadvertently failed to sign the second order on behalf of
15 Plaintiff Efrain Garcia." (Doc. 35, ¶ 16.)
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On January 17, 2008, the DMV notified Plaintiff Ofelia Garcia that her driving privileges

17 had been reinstated. (Doc. 35, ¶ 17.) Plaintiffs allege that they "thought the matter settled and
18 assumed all previous judgments against them would be removed." (Doc. 35, ¶ 18.) In 2009,
19 Plaintiffs discovered that the Abstract of Judgment was still recorded against them. (Doc. 35,
20 ¶ 18.) Plaintiffs contacted Allstate's attorney of record, including sending "several . . . letters . . .,
21 all of which went unanswered." (Doc. 35, ¶ 18.) Plaintiffs discovered that the second order to set
22 aside default for Plaintiff Efrain Garcia had not been signed. (Doc. 35, ¶ 18.) Plaintiffs alleged
23 that, "[a]lthough the Court's intent was clear," Allstate's counsel "refused to remove the Abstract
24 of Judgment." (Doc. 35, ¶ 18.)
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On February 28, 2011, Plaintiffs filed a declaration from Efrain Garcia with the Tulare

26 County Superior Court, requesting that the judge sign the order setting aside the default and
27 removing the Abstract of Judgment. (Doc. 35, ¶ 19.) The order was signed on April 5, 2011, and
28 default and default judgment against Efrain Garcia were set aside. (Doc. 35, ¶ 19.) Plaintiffs
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1 allege that Allstate and its attorney "refused to dismiss the case," despite "years of providing
2 supporting documentation." (Doc. 35, ¶ 20.) On November 3, 2011, Plaintiffs filed a Settlement
3 Conference Statement with the Tulare County Superior Court for a settlement conference
4 scheduled for November 15, 2011. (Doc. 35, ¶ 20.) On November 11, 2011, Allstate dismissed
5 the state court action. (Doc. 35, ¶ 20.)
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Plaintiffs' FAC alleges one cause of action for malicious conduct in pursuing a subrogation

7 claim. (Doc. 35, ¶¶ 21-28.)
8 B.

Procedural Background

9

On March 14, 2012, Plaintiffs, represented by counsel, filed a lawsuit in Tulare County

10 Superior Court against Allstate alleging a single cause of action for malicious prosecution. On
11 April 17, 2012, Allstate removed the action to this Court, in the case entitled Garcia, et al. v.
12 Allstate Insurance, case no. 1:12-cv-00609-AWI-SKO ("Garcia I"). (Doc. 1.)
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On June 21, 2012, Allstate filed an anti-SLAPP motion. (Doc. 13.) Plaintiffs, represented

14 by counsel, did not file an opposition.
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On August 17, 2012, Plaintiffs, representing themselves pro se, filed another action in

16 Tulare County Superior Court against Allstate, which was eventually removed by Allstate to this
17 Court in the case entitled Garcia, et al. v. Allstate Insurance, case no. 1:12-cv-01762-AWI-SKO
18 ("Garcia II"). (Garcia II, Doc. 1, pp. 5-14.) The parties were identical to those in Garcia I.
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On September 18, 2012, Magistrate Judge Oberto issued Findings and Recommendations

20 ("F&R") in Garcia I that Allstate's anti-SLAPP motion be granted without prejudice to Plaintiffs'
21 ability to amend the complaint. (Doc. 16.) No objections to the F&R were filed, and on October
22 17, 2012, District Judge Ishii issued an order adopting the F&R and allowing Plaintiffs 21 days to
23 file an amended complaint. (Doc. 18.)
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On October 29, 2012, Allstate removed Garcia II, Plaintiffs' pro se action, to this Court,

25 asserting that it was related to Garcia I. (Garcia II, Doc. 1, 2:10-20.) On November 5, 2012,
26 Allstate filed a Motion to Dismiss in Garcia II contending that Garcia II was duplicative of
27 Garcia I. (Garcia II, Doc. 10.)
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On November 21, 2012, the Court closed Garcia I and entered judgment in favor of

2 Allstate due to Plaintiffs' failure to file an amended complaint. (Docs. 20, 21.) Plaintiffs were still
3 represented by counsel at the time Garcia I was closed, as their attorney had neither filed a request
4 for substitution of counsel nor sought to withdraw from representation. (See generally Garcia I
5 docket.)
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On December 3, 2012, Allstate filed a Motion for Attorney's Fees in Garcia I. (Doc. 22.)

7 On December 6, 2012, Plaintiffs filed their opposition to Allstate's Motion to Dismiss in Garcia II,
8 and on December 10, 2012, Allstate filed its reply. (Garcia II, Docs. 12, 13.)
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On December 13, 2012, District Judge Ishii issued an order in Garcia II (Doc. 16 (also

10 docketed in Garcia I as Doc. 25)), finding that the complaints in Garcia I and Garcia II were
11 impermissibly duplicative with identical parties. (Garcia II, Doc. 16, 3:27-28.) The order noted
12 that Garcia I alleged a malicious prosecution claim and, while the precise cause of action in
13 Garcia II was not clear, "[n]evertheless, the two cases appear to infringe on the same rights of
14 Plaintiffs[;] it appears that substantially the same evidence would be used in . . . both cases, it
15 appears that the rights established in one case would impair or destroy the rights in the other, and
16 the two cases share the same nucleus of facts." (Garcia II, Doc. 16, 4:3-6.) Accordingly, the
17 Court dismissed Garcia II, noting that "[g]iven the considerable work that has already occurred in
18 Garcia I, and the fact there is a pending motion in that case, the Court sees no utility in
19 maintaining [Garcia II]." (Garcia II, Doc. 16, 4:11-13.)
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The Court also ordered further proceedings in Garcia I, finding that "Plaintiffs' opposition

21 [to the Motion to Dismiss in Garcia II] suggests that they were abandoned by their attorney in
22 Garcia I.

Plaintiffs' opposition indicates that they were never properly informed about the

23 consequences of filing a substitution of attorney, that the substitution was never filed, or that
24 Garcia I had been removed." (Garcia II, Doc. 16, 5:20-23.) Further, it appeared that Plaintiffs
25 were not aware of Allstate's anti-SLAPP motion or the 21-day deadline to file an amended
26 complaint. (Garcia II, Doc. 16, 5:23-24.)

As such, District Judge Ishii found that further

27 proceedings were warranted and that possible relief may be justified.

(Garcia II, Doc. 16,

28 5:24-28.) The Court ordered that Plaintiffs' opposition to the Motion to Dismiss in Garcia II be
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1 filed as a Motion for Relief in Garcia I, and referred the matter to Magistrate Judge Oberto to
2 issue findings and recommendations on whether relief from judgment was appropriate due to
3 attorney abandonment under Rules 59 and/or 60 of the Federal Rules of Civil Procedure. (Garcia
4 II, Doc. 16, 6:10-13.)
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On December 14, 2012, District Judge Ishii denied without prejudice Allstate's Motion for

6 Attorney's Fees in Garcia I pending the resolution of Plaintiffs' Motion for Relief. (Doc. 26.)
7

On April 22, 2013, Magistrate Judge Oberto issued an F&R in Garcia I that Plaintiffs'

8 motion for relief be granted, the order closing Garcia I be set aside, and the case be reopened.
9 (Doc. 28.) On May 8, 2013, Plaintiffs lodged the FAC, which was held in abeyance by the Court
10 pending the objection period for the F&R and the District Judge's final determination. (Docs. 29,
11 30.) No objections to the F&R were filed, and on May 21, 2013, District Judge Ishii issued an
12 order adopting the F&R. (Doc. 32.) The case was reopened, and Plaintiffs' lodged FAC was
13 deemed filed on that date. (Docs. 32, 35.)
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On June 5, 2013, Allstate filed the instant anti-SLAPP and motion for attorney's fees.

15 (Doc. 39.)
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III.

DISCUSSION

17 A.

Legal Standard

18

The California legislature enacted California Code of Civil Procedure section 425.16(a) as

19 a remedy for the "disturbing increase in lawsuits brought primarily to chill the valid exercise of the
20 constitutional rights of freedom of speech and petition for the redress of grievances." Cal. Code
21 Civ. Proc. § 425.16(a); see also Equilon Enters., LLC v. Consumer Cause, Inc., 29 Cal. 4th 53,
22 59-60 (2002). Such lawsuits are known as "SLAPP" suits, an acronym for "strategic lawsuit
23 against public participation." Equilon Enters, 29 Cal. 4th at 57, n.1. SLAPP suits are "civil
24 lawsuits. . . aimed at preventing citizens from exercising their political rights or punishing those
25 who have done so." Rezec v. Sony Pictures Entm't, Inc., 116 Cal. App. 4th 135, 139 (2004)
26 (citations omitted). Section 425.16(a) provides that the statute shall be broadly construed. Rohde
27 v. Wolf, 154 Cal. App. 4th 28, 35 (2007).
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A defendant opposing a SLAPP claim may bring a special motion to strike any cause of

2 action "arising from any act of that person in furtherance of the person's right of petition or free
3 speech under the United States or California Constitution in connection with a public issue." Cal.
4 Civ. Proc § 425.16(b)(1). The so-called "anti-SLAPP" statute provides a means of quickly
5 identifying and eliminating SLAPP actions through early dismissal. Because SLAPP suits seek to
6 deplete "the defendant's energy" and drain "his or her resources," the legislature sought "to prevent
7 SLAPPs by ending them early and without great cost to the SLAPP target." Kibler v. N. Inyo
8 Cnty. Local Hosp. Dist., 39 Cal. 4th 192, 197 (2006) (citations omitted). "Thus, in promulgating
9 section 425.16, the California legislature provided that a 'special motion to strike may be brought
10 early in the lawsuit and that discovery ordinarily may not proceed unless and until the court finds
11 that the [plaintiff's] suit has a probability of success.'" Aeroplate Corp. v. Arch Ins. Co., No. CV F
12 06-1099 AWI SMS, 2006 WL 3257487, at *3 (E.D. Cal. Nov. 9, 2006) (citing Rogers v. Home
13 Shopping Network, Inc. 57 F. Supp. 2d 973, 976 (C.D. Cal.1999)).
14

The Ninth Circuit has determined that Section 425.16 applies in federal courts in the

15 absence of "direct collusion" between the state enactment and the Federal Rules of Civil Procedure
16 8, 12, and 56. U.S. ex rel. Newsham v. Lockheed Missiles & Space Co., Inc., 190 F.3d 963, 973
17 (9th Cir. 1999); see also Makaeff v. Trump Univ., LLC, 11-55016, 2013 WL 6183821 (9th Cir.
18 Nov. 27, 2013) (denying petition for rehearing of Makaeff v. Trump Univ., LLC, 715 F.3d 254,
19 275 (9th Cir. 2013)) (Wardlaw, J., and Callahan, J., concurring) (finding that anti-SLAPP
20 provisions apply in federal court); Hopscotch Adoptions, Inc. v. Kachadurian, No. CV F 09-2101
21 LJO MJS, 2011 WL 587357, at *3 (E.D. Cal. Feb. 9, 2011); Aeroplate Corp, 2006 WL 3257487,
22 at *4. California's "[a]nti-SLAPP statute and the Federal Rules do, in some respects, serve similar
23 purposes, namely the expeditious weeding out of meritless claims before trial . . . . [T]here is no
24 indication that Rules 8, 12, and 56 were intended to 'occupy the field' with respect to pretrial
25 procedures aimed at weeding out meritless claims." Newsham, 190 F. 3d at 972. The Ninth
26 Circuit found that:
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Although Rules 12 and 56 allow a litigant to test the opponent's claims before trial,
California's "special motion to strike" adds an additional, unique weapon to the
pretrial arsenal, a weapon whose sting is enhanced by an entitlement to fees and
costs. Plainly, if the anti-SLAPP provisions are held not to apply in federal court, a
litigant interested in bringing meritless SLAPP claims would have a significant
incentive to shop for a federal forum. Conversely, a litigant otherwise entitled to
the protections of the Anti-SLAPP statute would find considerable disadvantage in
a federal proceeding.

5 Id. at 973.
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"Special procedural rules apply where an anti-SLAPP motion is brought in federal court."

7 Bulletin Displays, LLC v. Regency Outdoor Adver., Inc., 448 F. Supp. 2d 1172, 1180 (C.D. Cal.
8 2006); see also Hopscotch Adoptions, Inc., 2011 WL 587357, at *3. As such, "the federal court
9 special motion is a far different (and tamer) animal than its state-court cousin." Makaeff, 715 F.3d
10 254, 275 (9th Cir. 2013) (Kozinski, C.J., concurring). Federal courts must apply federal standards
11 when considering Section 425.16 motions. Rogers, 57 F. Supp. 2d at 982. "If a defendant makes
12 a special motion to strike based on alleged deficiencies in the plaintiff's complaint, the motion
13 must be treated in the same manner as a motion under Rule 12(b)(6) except that the attorney's fee
14 provision of § 425.16(c) applies." Id. at 983. However, "[i]f a defendant makes a special motion
15 to strike based on the plaintiff's alleged failure of proof, the motion must be treated in the same
16 manner as a motion under Rule 56 except that again the attorney's fees provision of § 425.16(c)
17 applies." Id.
18

While a Section 425.16 special motion to strike does not apply to federal claims in federal

19 court, see, e.g., Bulletin Displays, LLC, 448 F. Supp. 2d at 1182; Hopscotch Adoptions, Inc., 2011
20 WL 587357, at *4, the anti-SLAPP statute does apply to "state law claims that federal courts hear
21 pursuant to their diversity jurisdiction." Hilton v. Hallmark Cards, 599 F.3d 894, 900 (9th Cir.
22 2010).
23

A court considering a motion to strike under California's anti-SLAPP statute must engage

24 in a two-part inquiry. First, a defendant must make an initial prima facie showing that the
25 plaintiff's suit arises from activity protected by the anti-SLAPP statute. Cal. Code Civ. Pro.
26 § 425.16(b)(1); Brill Media Co. v. TCW Group, Inc., 132 Cal. App. 4th 324, 329, (2005),
27 disapproved on other grounds in Simpson Strong-Tie Co., Inc. v. Gore, 49 Cal. 4th 12 (2010). In
28 determining whether the defendant has made this showing, the California Supreme Court has
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1 stressed that "the critical point is whether the plaintiff's cause of action itself was based on an act
2 in furtherance of the defendant's right of petition or free speech." City of Cotati v. Cashman,
3 29 Cal. 4th 69, 78 (2002). Second, if the defendant is able to make this threshold showing, the
4 burden shifts to the plaintiff to demonstrate a probability of prevailing on the challenged claims.
5 Accordingly, a plaintiff must show that the claim is "both legally sufficient and supported by a
6 sufficient prima facie showing of facts to sustain a favorable judgment if the evidence submitted
7 by the plaintiff is credited." Jarrow Formulas, Inc. v. LaMarche, 31 Cal. 4th 728, 744 (2003).
8 Claims for which a plaintiff is able to satisfy this burden are "not subject to being stricken as a
9 SLAPP." Id.; see also Roderick v. Weissman, No. 1:11-CV-02093 LJO, 2012 WL 639463, at *2
10 (E.D. Cal. Feb. 24, 2012).
11 B.

Analysis

12

Allstate moves to strike Plaintiffs' single cause of action for malicious prosecution. As

13 Plaintiffs' complaint alleges a state law claim, and this action was removed by Allstate to this
14 Court based on diversity, the Court properly considers Allstate's anti-SLAPP motion.1
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1.

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Allstate Meets Its Burden to Show that Plaintiffs' Suit Arises From Protected
Activity

Allstate bears the initial burden of making a prima facie showing that Plaintiffs' suit arises

18 from activity that is protected under California's anti-SLAPP statute.

Cal. Code Civ. Pro.

19 § 425.16(b)(1); Brill Media Co., 132 Cal. App. 4th at 329. "[T]he critical consideration is whether
20 the cause of action is based on the defendant's protected free speech or petitioning activity."
21 Navellier v. Sletten, 29 Cal. 4th 82, 89 (2002). "[A] defendant that satisfies its initial burden of
22 demonstrating the targeted action is one arising from protected activity faces no additional
23 requirement of proving the plaintiff's subjective intent . . . Nor need a moving defendant
24 demonstrate that the action actually has had a chilling effect on the exercise of such rights." Id. at
25 88 (citation omitted). "A defendant meets this [protected activity] burden by demonstrating that
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Defendant's anti-SLAPP motion was timely filed, as it was filed within 60 days of the date that the Court deemed
Plaintiffs' FAC filed. See Cal. Code Civ. Proc. § 425.16(f).

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1 the act underlying the plaintiff's cause fits one of the categories spelled out in section 425.16,
2 subdivision (e)." Braun v. Chronicle Publ'g Co., 52 Cal. App. 4th 1036, 1043 (1997).
3

California Code of Civil Procedure 425.16 (e) provides:

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As used in this section, "act in furtherance of a person's right of petition or free
speech under the United States or California Constitution in connection with a
public issue" includes:

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(1) any written or oral statement or writing made before a legislative, executive,
or judicial proceeding, or any other official proceeding authorized by law;
(2) any written or oral statement or writing made in connection with an issue under
consideration or review by a legislative, executive, or judicial body, or any other
official proceeding authorized by law;
(3) any written or oral statement or writing made in a place open to the public or a
public forum in connection with an issue of public interest;
(4) or any other conduct in furtherance of the exercise of the constitutional right of
petition or the constitutional right of free speech in connection with a public issue
or an issue of public interest.

13 (emphasis added.)
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Here, Plaintiffs' FAC alleges one claim for malicious prosecution based on Allstate having

15 filed a prior lawsuit against Plaintiffs for subrogation of damages. (Doc. 35.) Allstate's filing of
16 the underlying lawsuit is a protected activity under Section 425.16(e)(1). "The constitutional right
17 to petition . . . includes the basic act of filing litigation or otherwise seeking administrative
18 action." Ludwig v. Super. Ct., 37 Cal. App. 4th 8, 19 (1995). "It is well established that filing a
19 lawsuit is an exercise of a party's constitutional right of petition." Chavez v. Mendoza, 94 Cal.
20 App. 4th 1083, 1087 (2001). The "filing of a judicial complaint satisfies the 'in connection with a
21 public issue' component of section 425.16, subdivision (e)(1) because it pertains to an official
22 proceeding." Id. at 1087.
23

Further, "by its terms, section 425.16 potentially may apply to every malicious prosecution

24 action, because every such action arises from an underlying lawsuit, or petition to the judicial
25 branch. By definition, a malicious prosecution suit alleges that the defendant committed a tort by
26 filing a lawsuit." Jarrow Formulas, Inc., 31 Cal. 4th at 734–35 (2003).
27

As such, Allstate has met its prima facie burden to show that Plaintiffs' suit arises under

28 activity protected by California's anti-SLAPP statute.
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2.

Plaintiffs Demonstrate a Probability of Prevailing on Their Claim for
Malicious Prosecution

As Allstate has met its initial burden, the burden now shifts to Plaintiffs to show the

3 probability of prevailing on the challenged claims. Cal. Code Civ. Pro. § 425.16(b)(1); Jarrow
4 Formulas, Inc., 31 Cal. 4th at 744. "[T]he plaintiff must demonstrate that the complaint is both
5 legally sufficient and supported by a sufficient prima facie showing of facts to sustain a favorable
6 judgment if the evidence submitted by the plaintiff is credited." Premier Med. Mgmt. Sys., Inc. v.
7 Cal. Ins. Guarantee Assn., 136 Cal. App. 4th 464, 476 (2006) (citations and emphasis omitted).
8 As such, a plaintiff must "establish a probability he or she will prevail on the claim at trial, i.e., to
9 proffer a prima facie showing of facts supporting a judgment in the plaintiff's favor." Chavez,
10 94 Cal. App. 4th at 1087.
11

"At [the] second step of the anti-SLAPP inquiry, the required probability that [a party] will

12 prevail need not be high." Hilton, 599 F.3d at 908. The "statute does not bar a plaintiff from
13 litigating an action that arises out of the defendant's free speech or petitioning; it subjects to
14 potential dismissal only those actions in which the plaintiff cannot state and substantiate a legally
15 sufficient claim." Id. at 908 (quoting Navellier, 29 Cal. 4th at 93); see also Chevron Corp. v.
16 Bonifaz, No. 09-05371 CW, 2010 WL 1948681, at *3 (N.D. Cal. May 12, 2010).
17

To survive an anti-SLAPP motion against a malicious prosecution claim, Plaintiffs are

18 required to show that their complaint is "supported by a sufficient prima facie showing of facts to
19 sustain a favorable judgment" on the issues of probable cause and malice. Roberts v. McAfee, Inc.,
20 660 F.3d 1156, 1163 (9th Cir. 2011) (internal citations and quotations omitted). The Court
21 "considers the pleadings and evidentiary submissions of both the plaintiff and the defendant;
22 though the court does not weigh the credibility or comparative probative strength of competing
23 evidence." Id.
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Where, as here, the process of discovery is not begun or is incomplete, the rule . . .
is . . . : (1) If the motion pursuant to section 425.16 challenges the legal sufficiency
of the complaint, and does not require the consideration of facts that are produced
through the discovery process, then the issue is decided under the standards
applicable to a motion to dismiss pursuant to Rule 12(b)(6) . . . [and] (2) If the
motion challenges the factual basis of the plaintiff's case, and relies on declarations
and affidavits produced through the discovery process, then the application of Rule
56 may require the motion to strike pursuant to section 425.16 be denied as
premature.
11

1 Aeroplate Corp, 2006 WL 3257487, at *5 (citing Rogers, 57 F. Supp. 2d at 982-83).
2

As the court in Rogers stated:

3

In sum, § 425.16 applies in federal court. However, it cannot be used in a manner
that conflicts with the Federal Rules. This results in the following outcome: If a
defendant makes a special motion to strike based on alleged deficiencies in the
plaintiff's complaint, the motion must be treated in the same manner as a motion
under Rule 12(b)(6) except that the attorney's fee provision of § 425.16(c) applies.
If a defendant makes a special motion to strike based on the plaintiff's alleged
failure of proof, the motion must be treated in the same manner as a motion under
Rule 56 except that again the attorney's fees provision of § 425.16(c) applies.

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8 Rogers, 57 F. Supp. 2d at 983; see also Aeroplate Corp, 2006 WL 3257487, at *5.
9

Here, it appears that Allstate is moving to specially strike the FAC under both the Rule 12

10 and Rule 56 standards. (See Doc. 39, 11:21-22 ("Evaluated either under a Rule 12 or a Rule 56
11 standard, the plaintiffs cannot meet their burden of proof on this action.").) Allstate contends that
12 Plaintiffs' "pleadings do not fulfill their burden" in establishing their probability of prevailing on
13 the malicious prosecution claim. (Doc. 39, 14:3.) Further, Allstate contends that the evidence
14 submitted in support of its anti-SLAPP motion, the Declaration of Nancy Daveldek, "establishes
15 that Allstate had no knowledge of the acts" undertaken in the filing of the underlying state court
16 lawsuit. (Doc. 39, 14:3-5; pp. 17-20.)
17

As Allstate is moving under both a Rule 12 and Rule 56 standard, the Court will first

18 consider if Plaintiffs' FAC adequately pleads a malicious prosecution claim under the Rule 12
19 standard. If Plaintiffs' claim is adequately pled, then the Court will consider whether Plaintiffs'
20 claim survives in light of the evidence submitted by Allstate.
21
22

a.

Plaintiffs' FAC Claim for Malicious Prosecution is Sufficiently Pled

The Court considers the legal sufficiency of Plaintiffs' complaint under a motion to dismiss

23 Rule 12(b)(6) standard. In determining whether a complaint fails to state a claim, the Court uses
24 the same pleading standard used under Federal Rule of Civil Procedure 8(a). Under Rule 8(a), a
25 complaint must contain a "short and plain statement of the claim showing that the pleader is
26 entitled to relief." Fed. R. Civ. P. 8(a)(2). "[T]he pleading standard Rule 8 announces does not
27 require 'detailed factual allegations,' but it demands more than an unadorned, the-defendant28 unlawfully-harmed-me accusation." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl.
12

1 Corp. v. Twombly, 550 U.S. 544, 555 (2007)). "[A] complaint must contain sufficient factual
2 matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Id. (quoting
3 Twombly, 550 U.S. at 557). "[A] complaint [that] pleads facts that are 'merely consistent with' a
4 defendant's liability . . . 'stops short of the line between possibility and plausibility of entitlement
5 to relief.'" Id. (quoting Twombly, 550 U.S. at 557). Further, although a court must accept as true
6 all factual allegations contained in a complaint, a court need not accept a plaintiff's legal
7 conclusions as true. Id. "Threadbare recitals of the elements of a cause of action, supported by
8 mere conclusory statements, do not suffice." Id. (quoting Twombly, 550 U.S. at 555).
9

Plaintiffs' FAC alleges one cause of action for malicious prosecution. (Doc. 35.) "To

10 establish a cause of action for the malicious prosecution of a civil proceeding, a plaintiff must
11 plead and prove that the prior action (1) was commenced by or at the direction of the defendant
12 and was pursued to a legal termination in [plaintiff's] favor; (2) was brought without probable
13 cause; and (3) was initiated with malice." Citi-Wide Preferred Couriers, Inc. v. Golden Eagle Ins.
14 Corp., 114 Cal. App. 4th 906, 911 (2003). These elements "have historically been carefully
15 circumscribed so that litigants with potentially valid claims will not be deterred from bringing
16 their claims to court by the prospect of a subsequent malicious prosecution claim." Sheldon Appel
17 Co. v. Albert & Olliker, 47 Cal. 3d 863, 872 (1989).
18
19
20

i.

Plaintiffs Have Sufficiently Alleged that the Prior Action was
Terminated in Plaintiffs' Favor

Plaintiffs meet the first prong that the prior action terminated in Plaintiffs' favor. Plaintiffs'

21 complaint alleges that on October 19, 2004, Allstate instituted the prior civil action against
22 Plaintiffs in the Tulare County Superior Court in Allstate Insurance Company v. Efrain Garcia
23 and Ofelia Garcia, case no. PCL1045534. (Doc. 35, ¶ 11.) Plaintiffs further allege that Allstate
24 voluntarily dismissed that action on November 11, 2011, after numerous court proceedings and
25 after Plaintiffs' filing of a Settlement Conference Statement. (Doc. 35, ¶ 20.) Plaintiffs thus sets
26 forth that the underlying state court action was commenced by Allstate and was terminated in
27 Plaintiffs' favor. As such, Plaintiffs' allegations sufficiently meet the first prong of establishing a
28 claim for malicious prosecution. See Chevron, 2010 WL 1948681, at *4 (noting that "[t]o be
13

1 considered favorable for the purposes of a malicious prosecution suit, the termination must reflect
2 the merits of the action and the plaintiff's innocence of the misconduct alleged in the lawsuit" and
3 finding that "[i]n most cases, a voluntary unilateral dismissal is considered a termination in favor
4 of the defendant in the underlying action") (citations omitted). Further, Allstate's anti-SLAPP
5 motion does not challenge this prong of the malicious prosecution claim. See Doc. 39.
6
ii.

7
8

Plaintiffs Have Sufficiently Alleged that Allstate Lacked
Probable Cause to Bring the Prior Action

Plaintiffs must also demonstrate that Allstate lacked probable cause to initiate the lawsuit.

9 "The probable cause inquiry is objective, asking whether a reasonable person would have thought
10 that the claim was legally tenable without regard to her mental state . . . . This is a lenient standard;
11 only those actions that any reasonable attorney would agree are totally and completely without
12 merit may form the basis for a malicious prosecution suit." Chevron Corp., 2010 WL 1948681, at
13 *6 (citations and quotation marks omitted).
14

Probable cause "is a question of law that turns on whether the underlying claim was legally

15 tenable, as determined on an objective basis." Estate of Tucker ex rel. Tucker v. Interscope
16 Records, Inc., 515 F.3d 1019, 1031 (9th Cir. 2008) (quoting Padres L.P. v. Henderson, 114 Cal.
17 App. 4th 495, 517) (quotation marks omitted). Probable cause "is measured by the state of the
18 defendant's knowledge, not by his intent. . . . [T]he standard applied to defendant's consciousness
19 is external to it. The question is not whether he thought the facts to constitute probable cause, but
20 whether the court thinks they did." Id. (citing Sheldon Appel Co., 47 Cal. 3d at 881) (quotation
21 marks omitted).
22

As noted above, when deciding an anti-SLAPP motion under a Rule 12(b)(6) standard, the

23 Court considers the sufficiency of pleadings. Plaintiffs' FAC alleges that the initial action arose
24 from an automobile accident that occurred on January 4, 2003, involving a vehicle previously
25 owned by Plaintiffs but sold by them six (6) months prior to the accident. (Doc. 35, ¶ 7.)
26 Plaintiffs allege that Plaintiff Efrain Garcia informed the police that the vehicle had been sold and
27 then re-sold again, and that they did not know the new owner of the vehicle. (Doc. 35, ¶ 7.) The
28 FAC contains the police report concerning the automobile accident, which states that the police
14

1 had contacted the registered owner of the subject vehicle, Efrain Garcia, at his residence and "Mr.
2 Garcia stated that he sold V-1 [Vehicle 1] approximately 6 months ago to a man named Jose Luis
3 and Jose Luis had sold V-1 to another person in the last few days. Mr. Garcia did not know the
4 name of the second buyer or the last name of Jose Luis. No further follow up was possible."
5 (Doc. 35, Exh. A, p. 19.)
6

Further, Plaintiffs allege that after receiving "correspondence from Allstate dated February

7 28, 2003[,] requesting insurance company information[,] Plaintiffs informed Allstate Insurance
8 they were not the owners, [and that] the vehicle had been sold in June 2002." (Doc. 35, ¶ 8, see
9 also ¶¶ 10, 21 and Exh. B.) Plaintiffs allege that "[a]fter Plaintiffs verbally provided the sale
10 information to Defendant, Allstate, Defendant still pursued subrogation against Plaintiffs despite
11 knowledge that Plaintiffs were not the owners of the subject vehicle at the time of the accident."
12 (Doc. 35, ¶ 11.) Additionally, Plaintiffs' FAC contains a Registration Information Request from
13 the DMV showing that Plaintiffs had been the owners of the subject vehicle, but there had been a
14 "release of liability" based on a "receipt date" of "7/19/02" with a "transfer date" of "6/11/02" to
15 "buyer: Adame JoseL." (Doc. 35, Exh. D, p. 27.) Plaintiffs allege that information obtainable
16 from the DMV "clearly support[ed] Plaintiffs' claim of their non-ownership of the subject
17 vehicle." (Doc. 35, ¶ 10.)
18

Plaintiffs' FAC contains the underlying state court complaint brought in the Tulare County

19 Superior Court, case no. PCL104531, which was filed on October 19, 2004. (Doc. 35, Exh. E, pp.
20 29-34.) Allstate Insurance Company was the named Plaintiff in the underlying suit, which was
21 brought against Efrain Garcia and Ofelia Garcia. (Doc. 35, Exh. E, p. 30.) Attorney Gary A.
22 Rosenberg indicated that he was "Attorney[] for Plaintiff." (Doc. 35, Exh. E, p. 30, 34.) The suit
23 was a "complaint in subrogation for damages" and alleged that on January 4, 2003, Allstate's
24 insured was involved in a motor vehicle accident with a vehicle that was "negligently owned,
25 drove, entrusted, managed, operated, maintained and controlled" by the Garcias, causing injuries
26 and damage to the insured. (Doc. 35, Exh. E, p. 30 and p. 32, ¶¶ 9-10.) Further, Allstate's
27 subrogation claim alleged that, "[p]rior to the filing of the instant lawsuit, [Allstate] notified [the
28 Garcias], and each of them, of the payment [that Allstate made to its insured] and of [Allstate's]
15

1 right to subrogation and demanded payment from [the Garcias], and each of them, in the sum of
2 $10,233.20, but [the Garcias], and each of them, have failed and refused, and continue to fail and
3 refuse, to pay [Allstate] the whole or any part thereof." (Doc. 35, Exh. E, p. 33, ¶ 17.)
4

Plaintiffs' FAC also contains the "Declaration in Lieu of Testimony" from Lorey K. Allen,

5 "litigation claims representative of Allstate Insurance Company" submitted by Allstate in the prior
6 action. (Doc. 35, Exh. Q, pp. 118-22.) The declaration was dated December 20, 2004, and signed
7 under penalty of perjury. (Doc. 35, Exh. Q, p. 122.) Ms. Allen declared that she was "one of the
8 custodians of the books, records and files of Plaintiff [Allstate] as those books, records and files
9 pertain to Defendants [the Garcias] herein." (Doc. 35, Exh. Q. p. 118, ¶ 2.) Ms. Allen declared
10 that she had "personally worked" on the books, records, and files pertaining to the Garcias, and
11 that, "[i]f called upon to testify in this action, as to the matters set forth in this Declaration, could
12 and would competently testify thereto, since the facts herein set forth are personally known to
13 [Ms. Allen] to be true." (Doc. 35, Exh. Q, p. 118-19, ¶ 2.) Ms. Allen declared that she "personally
14 reviewed the Complaint filed" in the underlying state court action and "verif[ied] the same and
15 hereby adopt said verified Complaint." (Doc. 35, Exh. Q, p. 119, ¶ 3.) Additionally, Ms. Allen's
16 declaration purports to attach "true and correct copies of documents in support of the negligence of
17 [the Garcias] . . ., (including, but not limited to, police reports if applicable) . . . ." (Doc. 35, Exh.
18 Q, p. 121, ¶ 14.)
19

As such, Allstate's underlying claim for subrogation was based on the allegation that the

20 Garcias drove, owned, and controlled the vehicle that was involved in the January 4, 2003,
21 accident against Allstate's insured. Allstate further alleged that it had contacted the Garcias prior
22 to initiating the lawsuit. Additionally, a representative from Allstate declared under penalty of
23 perjury that she was the litigation claims representative for Allstate and one of the custodian of
24 records for the files pertaining to the Garcias, and that she had adopted and verified the allegations
25 in Allstate's complaint and set forth that a police report had been reviewed, "if applicable." (Doc.
26 35, Exh. Q.)
27

However, the Garcias' allegations in the FAC set forth that the Garcias informed the police

28 that they no longer owned the subject vehicle on the date of the accident, the police report
16

1 reflected this information, and the Garcias further contacted Allstate to inform the insurance
2 company directly that they were not the owners of the vehicle and that it had been sold in June
3 2002, six (6) months prior to the accident. (Doc. 35, ¶¶ 7-10.)
4

In determining whether Allstate lacked probable cause to bring the initial lawsuit against

5 the Garcias for subrogation, the Court must determine if a reasonable person would have thought
6 that Allstate's claim was legally tenable. See Tucker, 515 F.3d at 1031. Allstate's underlying
7 complaint for subrogation was based on the allegation that the Garcias "were the owners, drivers,
8 employers of the drivers, principals of the drivers, maintained and/or controlled" the vehicle that
9 was involved in the automobile accident with Allstate's insured. (Doc. 35, Exh. E, p. 32, ¶ 8.)
10 However, the Garcias' FAC contains allegations and supporting documentation, including a copy
11 of the police report and a Registration Information Request from the DMV that shows that the
12 Garcias were not the owners of the vehicles at the time of the accident, had sold the vehicle
13 six (6) months prior to the date of the accident, and alleges that the Garcias had informed Allstate
14 of this information. (Doc. 35, ¶¶ 7-10, Exhs. A, D.) Further, the declaration by Allstate's
15 representative, Ms. Allen, in the underlying lawsuit implies that Allstate had access to the police
16 report, which states that the Garcias had informed the police that they no longer owned the
17 vehicle. (See Doc. 35, Exh. Q, p. 121, ¶ 14; see also Exh. A, p. 19.)
18

"In the context of an Anti-SLAPP motion, Plaintiff[s] merely must demonstrate a

19 probability of prevailing." Roderick, 2012 WL 639463, at *12 (citation and quotation marks
20 omitted).

Here, Allstate's subrogation claim is based upon the Garcias owning, driving, or

21 controlling the subject vehicle, and the Garcias' FAC sets forth that Allstate knew or should have
22 known prior to initiating the underlying lawsuit that the Garcias did not drive, control, or own the
23 vehicle because they had sold the vehicle prior to the accident. As such, the Garcias have
24 sufficiently alleged that Allstate lacked probable cause to initiate the underlying case, since there
25 would not be a legally tenable reason for Allstate to bring a subrogation lawsuit against the
26 Garcias if they did not drive, own, or control the automobile at the time of the accident. The
27 Garcias have thus shown the probability of prevailing on the element of probable cause in their
28 malicious prosecution claim.
17

1
2

iii.

Plaintiffs Have Sufficiently Alleged that Allstate Acted with
Malice in the Prior Action

"The malice element of the malicious prosecution tort relates to the subjective intent or
3
purpose with which the defendant acted in initiating the prior action." Sheldon Appel Co., 47 Cal.
4
3d at 874. In some jurisdictions, malice can be inferred from, among other things, a lack of
5
probable cause. See Downey Venture v. LMI Ins. Co., 66 Cal. App. 4th 478, 515 n. 39 (1998).
6
However, in California, because the presence or absence of probable cause is an entirely objective
7
inquiry, "[b]y itself, the conclusion that probable cause is absent logically tells the trier of fact
8
nothing about the defendant's subjective state of mind." Id. at 498. As such, "the presence of
9
malice must be established by other, additional evidence." Id. The additional evidence "must
10
include proof of either actual hostility or ill will on the part of the defendant or a subjective intent
11
to deliberately misuse the legal system for personal gain or satisfaction at the expense of the
12
wrongfully sued defendant." Id. at 498–99.
13
"Additional proof of malice can consist of evidence a party knowingly brings an action
14
without probable cause . . . . [A] corollary to this rule can be stated as follows: malice can be
15
inferred when a party continues to prosecute an action after becoming aware that the action lacks
16
probable cause." Daniels v. Robbins, 182 Cal. App. 4th 204, 226 (2010). The actual ill will or
17
improper purpose required for "malice" in a malicious prosecution action can range from "open
18
hostility to indifference." See Soukup v. Law Offices of Herbert Hafif, 39 Cal. 4th 260, 296 (2006).
19
Malice can be inferred when "defendants in the malicious prosecution action continued their
20
prosecution of the underlying . . . action after learning it was baseless." Id. at 297 (citing Zamos v.
21
Stroud, 32 Cal. 4th 958, 968-69 (2004)).
22
Here, Plaintiffs have sufficiently alleged that Allstate lacked probable cause in bringing the
23
underlying suit. The Garcias' FAC alleges that Allstate had knowledge that it lacked probable
24
cause to bring the prior subrogation suit because Allstate had access to the police report, the
25
Garcias had informed the police that they no longer owned the subject vehicle at the time of the
26
accident, and the Garcias personally informed Allstate that they were not the owners of the
27
28
18

1 vehicle. (Doc. 35, ¶¶ 7-10, 21-22.) As such, the Garcias' allegations set forth that Allstate brought
2 the prior action knowing that it lacked probable cause to sue for subrogation.
3

Further, the Garcias' FAC sets forth allegations that the prior lawsuit continued to be

4 prosecuted despite Allstate's knowledge that it lacked probable cause. The Garcias allege that, on
5 July 8, 2008, upon learning of Allstate's suit after default judgment was entered against them, they
6 filed a motion to set aside and vacate the default judgment, and "provided all documentation
7 regarding the sale of the subject vehicle, the Department of Motor Vehicle print-out proving the
8 sale, (equally available to defendant[] all along) and Plaintiff[] Efrain Garcia's pay stub for the
9 date that Defendant[], Allstate[,] allegedly served Mr. and Mrs. Garcia with the subject lawsuit
10 showing that Mr. Garcia could not have been served that day as [Allstate] alleged." (Doc. 35,
11 ¶ 15, Exh. K.) Plaintiffs also filed a general denial that asserted that the vehicle had been sold and
12 that this information had been provided to the police. (Doc. 35, ¶ 15, Exh. L.)
13

On October 14, 2008, the judge in the prior state court action approved the motion and

14 signed the order setting aside default and vacating default against Ofelia Garcia, but allegedly
15 inadvertently failed to sign the second order on behalf of Efrain Garcia. (Doc. 35, ¶ 16, Exh. M.)
16 In 2009, Plaintiffs alleged that they discovered that the Abstract of Judgment was still recorded
17 against them, and they contacted Allstate's attorney of record requesting that the recording be
18 canceled and the abstract of judgment removed. (Doc. 35, ¶ 18.) Allstate's attorney allegedly
19 failed to respond to the Garcias' requests. (Doc. 35, ¶ 16.) The Garcias also wrote several letters
20 to Allstate's attorney, "all of which went unanswered." (Doc. 35, ¶ 18.) Upon learning that the
21 second order setting aside default and vacating the judgment against Efrain Garcia had not been
22 signed, on February 28, 2011, the Garcias filed a declaration from Efrain Garcia in support of the
23 motion to set aside default and remove/release the abstract of judgment, attaching all
24 correspondence the Garcias had provided to Allstate's counsel as well as additional supporting
25 documentation. (Doc. 35, ¶ 19, Exh. O.) The state court ordered that default judgment be set
26 aside and the abstract of judgment be released/removed against Efrain Garcia on April 5, 2011.
27 (Doc. 35, ¶ 19, Exh. P.)
28
19

1

Plaintiffs further allege that Allstate "still refused to dismiss the case" against the Garcias,

2 even though they had provided substantial supporting documentation that they were not the
3 owners of the vehicle at the time of the accident. (Doc. 35, ¶ 20.) The Garcias allege that on
4 November 3, 2011, they filed a Settlement Conference Statement in preparation for a settlement
5 conference scheduled for November 15, 2011, which again stated their position. (Doc. 35, ¶ 20.)
6 On November 11, 2011, Allstate "finally dismissed the case." (Doc. 35, ¶ 20.)
7

As noted above, Plaintiffs merely must demonstrate a probability of prevailing on their

8 claims in the context of an anti-SLAPP motion. Roderick, 2012 WL 639463, at *12. Here,
9 Plaintiffs' FAC sufficiently alleges that Allstate acted with malice since it initiated the prior
10 lawsuit knowing that it lacked probable cause and continued to prosecute the lawsuit upon further
11 showing that it lacked probable cause. Plaintiffs allege that Allstate knowingly lacked probable
12 cause at the initiation of the prior lawsuit, since the Garcias had personally informed Allstate that
13 they were not the owners of the subject vehicle at the time of the accident, the police report further
14 indicated as such, and evidence submitted by Allstate indicates that it reviewed the police report.
15 (Doc. 35, ¶¶ 7-10; Exh. Q.) Additionally, Plaintiffs' allegations set forth that Allstate continued to
16 prosecute the action despite further showing that it lacked probable cause based on the Garcias
17 providing supporting documentation that they were not the owners of the vehicle in their motions
18 to set aside default and vacate default judgment, Allstate's counsel's refusal to cancel and remove
19 the abstract of judgment in light of this showing, and Allstate's refusal to dismiss the case even
20 after the default and default judgment were set aside until such time as Allstate was required to
21 appear at a settlement conference. (Doc. 35, ¶¶ 15-20.) As such, since the Garcias' allegations
22 show that Allstate both knew that it lacked probable cause at the initiation of the subrogation suit,
23 and continued to prosecute the suit even after the Garcias provided documentation that Allstate
24 lacked probable cause to continue, the Garcias have thus shown the probability of prevailing on
25 the element of malice in their malicious prosecution claim.
26

As set forth above, the Garcias have sufficiently pled all three elements of a malicious

27 prosecution case: that the prior action (1) was commenced by or at the direction of the defendant
28 and was pursued to a legal termination in plaintiffs' favor; (2) was brought without probable cause;
20

1 and (3) was initiated or continued with malice. Citi-Wide Preferred Couriers, Inc., 114 Cal. App.
2 4th at 911. Accordingly, after reviewing the sufficiency of Plaintiffs' pleadings under a Rule
3 12(b)(6) standard, Allstate's motion should be denied.
4
5
6

b.

Allstate's Submitted Evidence Does Not Overcome Plaintiffs' Malicious
Prosecution Claim

Since Plaintiffs' claim is sufficiently pled, the Court now considers whether Plaintiffs'

7 claim survives in light of the evidence submitted by Allstate in support of the anti-SLAPP motion.
8 The Court notes that if Allstate's motion is granted based on the submitted evidence, because the
9 "discovery-limiting provisions of section 425.16, subdivisions (f) and (g), collide with the
10 discovery-permitting provisions of Rule 56," the motion would likely need to be denied as
11 premature and Plaintiffs would need to be permitted to conduct discovery as to the contentions
12 raised by Allstate's evidence. Aeroplate Corp., 2006 WL 3257487, at *9. Here, however, as
13 Allstate's submitted evidence is contradicted by its own contentions in the prior lawsuit, the Court
14 finds that Allstate's submitted evidence does not overcome Plaintiffs' claim for malicious
15 prosecution.
16

Allstate contends that it contracted with an outside company, CCS Companies ("CCS") to

17 pursue subrogation actions arising from Allstate's insurance claims and that CCS, not Allstate,
18 decided to bring the underlying action. (Doc. 39, 7:4-20.) Allstate asserts that is not vicariously
19 liable for actions by CCS and its attorney in bringing the underlying lawsuit, and Plaintiffs are
20 thus unable to show probable cause or malicious intent by Allstate. (Doc. 39, 7:4-9:12.)
21

As a general rule, Plaintiffs cannot maintain a claim for "malicious prosecution where

22 defendants show 'that they have in good faith consulted a lawyer, have stated all the facts to him,
23 have been advised by the lawyer that they have a good cause of action and have honestly acted
24 upon the advice of the lawyer.'" Fisher Tool Co., Inc. v. Gillet Outillage, 530 F.3d 1063, 1066
25 (9th Cir. 2008) (citing DeRosa v. Transamerica Title Ins. Co., 213 Cal. App. 3d 1390, 1397
26 (1989)); see also Kennedy v. Byrum, 201 Cal. App. 2d 474, 481 (1962) ("Reliance in good faith on
27 the advice of counsel is a defense to an action for malicious prosecution, inasmuch as such defense
28 shows probable cause.") (citations omitted).

Here, however, as set forth above, Plaintiffs'
21

1 allegations assert that Allstate lacked probable cause, and Allstate's motion has not shown that it
2 relied upon the advice of counsel before bringing the prior lawsuit.
3

Instead, Allstate contends that it relied entirely upon an outside agent and that agent's

4 counsel, and that Allstate was not part of the decision-making process regarding the filing of the
5 underlying lawsuit. (Doc. 13, 7:4-9:12.) Allstate submits the Declaration of Nancy Daveldek, a
6 senior service adjuster who has been employed with Allstate for approximately ten years. (Doc.
7 39, Daveldek Decl., p. 18, ¶ 1.) Ms. Daveldek declares Allstate contracted with CCS "to, among
8 other things, pursue subrogation actions arising from insurance claims." (Doc. 39, Daveldek
9 Decl., p. 18, ¶ 2.) Ms. Daveldek states that, in the scope of her employment, she had "access to
10 the Allstate-CCS contract," which stated that "CCS provided all staffing on [subrogation] claims
11 from Allstate," and that "CCS was responsible for pursuing subrogation on these claims, including
12 referring claims to attorneys when appropriate." (Doc. 39, Daveldek Decl., p. 18, ¶ 3.) While
13 "CCS was to notify Allstate" before filing a suit, "CCS was not obligated to report to Allstate
14 about the progress of the subrogation lawsuits that [CCS] pursued."

(Doc. 39, Daveldek Decl.,

15 p. 18, ¶ 3.)
16

Ms. Daveldek indicates that she reviewed the file regarding the underlying lawsuit against

17 the current Plaintiffs and notes that:
18
19
20
21
22

There are entries that state that this file was sent to CCS for subrogation, a few
entries concerning checks written to CCS to reimburse for court costs incurred, and
a few entries in 2005 concerning obtaining and transmitting to CCS a declaration
by the insured relating to a default judgment. There was no other communications
noted in the diary between CCS and Allstate related to Allstate being updated as to
the progress of the subrogation action from CCS, nor did Allstate have any
information as to the decision to dismiss the subrogation action in November 2011
until it was told that the action was dismissed.

23 (Doc. 39, Daveldek Decl., p. 19, ¶ 5.) Ms. Daveldek further declares that in November 2011, she
24 "received an e-mail from CCS stating that a judgment that Allstate obtained in [the underlying]
25 case had been vacated at the Garcias' request." (Doc. 39, Daveldek Decl., p. 19, ¶ 4.) Ms.
26 Daveldek was informed by CCS that "the attorney assigned to this subrogation action would need
27 to re-file suit, serve the Garcias again, and again seek a judgment, and that Allstate would need to
28 pay the costs associated with filing suit a second time." (Doc. 39, Daveldek Decl., p. 19, ¶ 4.)
22

1 Ms. Daveldek agreed that it would be acceptable for Allstate to incur the filing fee and court costs
2 in re-filing the suit based on the amount of damages for the subrogation claim; Ms. Daveldek
3 further declares that "[a]t the time that [she] made the recommendation, [she] did not have any
4 further information about this subrogation lawsuit against Mr. and Mrs. Garcia." (Doc. 39,
5 Daveldek Decl., p. 19, ¶ 4.)
6

Ms. Daveldek sets forth that CCS' attorney, Gary Rosenberg, "did not report to Allstate at

7 all during the pendency of the subrogation action against Mr. and Mrs. Garcia or after the
8 dismissal of that lawsuit, nor was he expected to do so. This is because under the CCS contract,
9 CCS had authority to hire attorneys to prosecute the subrogation action, and the attorney hired was
10 not required to report to Allstate." (Doc. 39, Daveldek Decl., p. 19, ¶ 5.)
11

Allstate contends that since Plaintiffs named Allstate as the Defendant in this action,

12 Plaintiffs must show Allstate's state of mind in pursuing the subrogation claim. (Doc. 39, 11:1613 15:13.) However, Allstate asserts that it contractually ceded control of its subrogation claim to
14 CCS and CCS' counsel, who are not named in the instant suit, and CCS and CCS' counsel were
15 responsible for filing and pursuing the underlying suit. As such, Allstate contends that Plaintiffs
16 cannot show that Allstate had the requisite state of mind to support either the probable cause or
17 malice prongs of Plaintiffs' malicious prosecution claim, since CCS and CCS' counsel controlled
18 the actions regarding the underlying suit, not Allstate. (Doc. 39, 12:14-19.)
19

Allstate's contentions ignore the fact that Allstate, not CCS, was the plaintiff in the

20 complaint filed in the prior lawsuit and that attorney Gary A. Rosenberg represented that he was
21 the attorney for the named plaintiff in that case. (See Doc. 35, Exh. E.) CCS is not mentioned
22 anywhere in the underlying lawsuit. (See Doc. 365, Exh. E.) Additionally, the Garcias' FAC
23 contains the Declaration in Lieu of Testimony by Lorey K. Allen submitted in the prior lawsuit.
24 (Doc. 35, Exh. Q.)

Ms. Allen declares, under penalty of perjury, that she is a "litigation

25 representative of Allstate Insurance Company, Plaintiff herein," and that she "personally reviewed
26 the Complaint filed" in the prior lawsuit and "verif[ied] the same and hereby adopt said verified
27 Complaint." (Doc. 35, Exh. Q, pp. 118-19, ¶¶ 1, 3.)
28
23

1

Allstate relies on Jacques Interiors v. Petrak, 188 Cal. App. 3d 1363, 1370 (1987) for the

2 contention that, in a malicious prosecution suit, the court must determine the defendant's state of
3 mind and cannot base the claim upon the state of mind of additional entities not named in the suit.
4 Id. at 1370. Additionally, Allstate relies on Citi-Wide Preferred Couriers, Inc., 114 Cal. App. 4th
5 at 912 for the contention that the court's analysis must focus on "the plaintiff in the underlying
6 action" and not on entities who were "not parties." Id. at 912. Allstate's contentions appear to rely
7 on the evidence submitted that CCS, not Allstate, was responsible for the prior lawsuit and that
8 Allstate was not involved. Allstate's reliance on these cases appears to be misplaced, however,
9 since Allstate was a named party in the prior lawsuit.
10

Although Allstate now contends that it was not responsible for bringing the prior lawsuit,

11 the actual complaint and Ms. Allen's declaration in the prior case contradict that contention. As
12 such, when there is a factual dispute regarding a malicious prosecution claim, the malicious
13 prosecution plaintiff has a right to have a trier of fact "resolve the threshold question of . . . factual
14 knowledge or belief." Citi-Wide Preferred Couriers, Inc., 114 Cal. App. 4th at 912. As such,
15 Allstate's submitted evidence does not overcome Plaintiffs' claim for malicious prosecution.
16

Accordingly, for the reasons set forth above, it is RECOMMENDED that Allstate's

17 anti-SLAPP motion be DENIED.
18 C.

Allstate's Request for Attorney's Fees and Costs Should be Denied

19

Allstate requests attorney's fees in the amount of $7,447.50, which includes $3,900.00 for

20 preparing the initial anti-SLAPP motion, as well as an additional $3,547.50 for preparing the
21 instant motion. (Doc. 39, 16:1-8.) Allstate's request is based upon Section 425.16(c)(1), which
22 provides that "a prevailing defendant on a special motion to strike shall be entitled to recover . . .
23 attorney's fees and costs." "[D]efendants sued in federal courts can bring anti-SLAPP motions to
24 strike state law claims and are entitled to attorneys' fees and costs when they prevail." Verizon
25 Delaware, Inc. v. Covad Commc'ns Co., 377 F.3d 1081, 1091 (9th Cir. 2004).
26
27
28
24

1

Here, however, Allstate is not the prevailing party, as the Court recommends that Allstate's

2 anti-SLAPP motion be denied. As such, it is likewise RECOMMENDED that Allstate's request
3 for attorney's fees for the instant motion be DENIED.2
4

IV.

5

CONCLUSION AND RECOMMENDATION

Based on consideration of the declarations, pleadings, and exhibits to the present motion,

6 the Court RECOMMENDS that:
7

1.

Allstate's anti-SLAPP motion be DENIED;

8

2.

Allstate's request for an award of attorney's fees be DENIED; and

9

3.

Allstate file an answer or other responsive pleading within twenty-one (21) days of

10

the final order by the district judge on this motion.

11

The Clerk's Office is DIRECTED to serve Plaintiffs with a copy of these findings and

12 recommendations via U.S. mail at the following address:
13
14

Efrain Garcia and Ofelia Garcia
1095 Adams Avenue
Orange Cove, CA 93646

15

These findings and recommendations are submitted to the district judge assigned to this

16 action, pursuant to 28 U.S.C. § 636(b)(1)(B) and this Court's Local Rule 304. Within twenty-one
17 (21) days of service of this recommendation, any party may file written objections to these
18 findings and recommendations with the Court and serve a copy on all parties. Such a document
19 should be captioned "Objections to Magistrate Judge's Findings and Recommendations."

If

20 objections are filed, any responses to the objections shall be filed within fourteen (14) days of the
21 service of the objections. Local Rule 304(d). The district judge will review the magistrate judge's
22 findings and recommendations pursuant to 28 U.S.C. § 636(b)(1)(C). The parties are advised that
23 failure to file objections within the specified time may waive the right to appeal the district judge's
24 order. Martinez v. Ylst, 951 F.2d 1153 (9th Cir. 1991).
IT IS SO ORDERED.
25
Dated:

26

January 6, 2014

/s/ Sheila K. Oberto
UNITED STATES MAGISTRATE JUDGE

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2

Defendant's request for attorney's fees based on the prior anti-SLAPP motion has been denied for reasons previously
set forth by the Court. (See Docs. 16, 18.)

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