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Roger Cleveland Golf Company, Inc. v. Krane & Smith, APC, et al. (April 15, 2014, B237424, B239375)

The California Court of Appeal, Second Appellate District, Division Three (Los Angeles) recently issued an opinion analyzing the applicable statute of limitations and tolling periods in a malicious prosecution cause of action. The Court of Appeal held that the statute of limitations is tolled during the pendency of an appeal because plaintiff cannot truthfully plead favorable termination of the prior action. Further, the court concluded that “the applicable statute of limitations for malicious prosecution is section 335.1, irrespective of whether the party being sued for malicious prosecution is the former adversary or the adversary’s attorneys.”

Krane & Smith, LLC and two other attorneys (collectively the “Attorneys”) represented Sportsmark Trading, Inc. (“Sportsmark”) against Roger Cleveland Golf Company, Inc. (“RCG”) in an action arising out of breach of a distributorship agreement. After ensuing litigation, the trial court granted RCG’s motion for nonsuit. On April 26, 2010, the trial court signed a written order granting nonsuit and dismissing the complaint. On June 21, 2010, Sportsmark appealed. The appeal was dismissed on February 2, 2011, and the remittitur issued that same day. On May 24, 2011, RCG filed a malicious prosecution complaint against Sportsmark and attorneys based on prosecuting the underlying proceeding without probable cause. The Attorneys filed an anti-SLAPP motion contending the malicious prosecution complaint was time barred under the one-year statute of limitations. The trial court granted the special motion to strike and RCG appealed.

The Court of Appeal considered whether a malicious prosecution cause of action had accrued during the pendency of an appeal even if Code of Civil Procedure section 340.6, subdivision (a) provided the applicable statute of limitations. A cause of action for malicious prosecution first accrues at the conclusion of the litigation in favor of the party allegedly prosecuted maliciously. When an appeal is taken from a judgment that constitutes a favorable termination, a plaintiff cannot assert a cause of action for malicious prosecution. Because the appeal is pending, the plaintiff cannot truthfully allege a termination of the action. The statute of limitations on a malicious prosecution cause of action commences to run upon entry of judgment in the prior action and continues to run until the date of filing the notice of appeal. The filing of an appeal renders the malicious prosecution action premature. Thus, the statute of limitations is tolled and recommences when the appellate process has been exhausted, i.e., the remittitur has been issued.

The Court of Appeal held further that Code of Civil Procedure section 340.6 does not supply the applicable statute of limitations governing a malicious prosecution action against an attorney. Instead, the applicable statute of limitations is Code of Civil Procedure section 335.1 because it applies to both the attorney and his or her client in a malicious prosecution action. The court explained that imposing separate statutes of limitation on a client and his or her attorney leads to an absurd result in which the client can be sued for following the attorney’s advice, long after the client’s attorney ceases to be potentially liable for recommending the court of action.

The court of appeal ultimately affirmed the granting of the anti-SLAPP motion, on the grounds that plaintiff had not met the minimal merit requirement for a showing of malice.

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