MALLANO, P. J.
An individual obtained a judgment against a homeowner and recorded an abstract of judgment with the county recorder in April 2003. Meanwhile, the homeowner debtor was having difficulty making her mortgage payments and turned to some friends, a married couple, for financial assistance. On two occasions, the couple loaned money to the debtor. On the first occasion, the loan was secured by a deed of trust on the debtor's real property; on the second occasion, by a "grant deed in lieu of foreclosure." The deed of trust was recorded in May 2003 and the grant deed in May 2005.
In December 2005, the couple filed a quiet title action against the debtor based on the grant deed in lieu of foreclosure. The case was tried to the court. The debtor prevailed.
While the quiet title action was pending, the judgment creditor filed suit against the couple, alleging the grant deed in lieu of foreclosure was fraudulent and was made with the intent to hinder, delay, or defraud the debtor's creditors, including himself. The couple prevailed on summary judgment.
In May 2009, the couple filed this suit against the judgment creditor, alleging malicious prosecution. In response, he filed a special motion to strike, contending the action was a strategic lawsuit against public participation (SLAPP) (Code Civ. Proc., § 425.16; undesignated section references are to that code). The trial court denied the motion and awarded attorney fees against the judgment creditor. This appeal followed.
We conclude the couple made a prima facie showing they would prevail on the merits of the case, primarily because (1) the judgment creditor's abstract of judgment was recorded before their grant deed in lieu of foreclosure, making the judgment senior and superior to the grant deed, and (2) the debtor's property remained subject to the judgment notwithstanding any transfer of ownership or subsequent liens. We also decide that the anti-SLAPP motion was frivolous, justifying the award of attorney fees.
The facts and allegations on appeal are taken from the pleadings in the parties' various lawsuits and the evidence submitted in connection with the anti-SLAPP motion.
In August 2001, Garrett Zelen filed an action against Patricia Rosenthal in Los Angeles Superior Court (Zelen v. Rosenthal (Super. Ct. L.A. County, 2001, No. 01C00849)). Rosenthal did not make an appearance. Judgment by default was entered in favor of Zelen in the amount of $9,394.35. Rosenthal did not satisfy the judgment. On April 4, 2003, Zelen recorded an abstract of judgment with the county recorder's office in Los Angeles. An amended abstract was recorded on January 12, 2004.
Virginia and James LaRose had known Rosenthal for more than 20 years. In the 1990's and 2000's, Rosenthal was having financial difficulty making mortgage payments on her home, located in Los Angeles County. The LaRoses loaned her $30,000. Rosenthal signed a promissory note secured by a deed of trust on her property. Under the note, Rosenthal was to make monthly payments to the LaRoses in the amount of $1,045.83 beginning November 1, 2002. She never made a payment.
On January 27, 2003, Rosenthal conveyed the property to the LaRoses by way of a grant deed, which recited that the transfer was a bona fide gift. The LaRoses decided they did not want to keep the property. On May 28, 2003, they deeded the property back to Rosenthal and recorded the deed of trust securing the $30,000 loan.
In 2004, Rosenthal fell further behind in her mortgage payments. The LaRoses agreed to loan her an additional $14,700 in exchange for Rosenthal's promise to list her house for sale, pay the mortgage payments timely, and execute a grant deed in lieu of foreclosure in favor of the LaRoses. Rosenthal agreed to pay the LaRoses out of the proceeds from the sale of the home. Rosenthal was informed that if she did not execute a grant deed in lieu of foreclosure, the LaRoses would commence foreclosure under the deed of trust on the $30,000 loan. On December 17, 2004, Rosenthal executed the grant deed in lieu of foreclosure and delivered it to the LaRoses, who in turn agreed not to record it as long as Rosenthal listed the house for sale and paid the mortgage on a timely basis. She did neither.
On May 17, 2005, the LaRoses recorded the grant deed in lieu of foreclosure. On December 20, 2005, they filed a quiet title action against Rosenthal based on the grant deed (LaRose v. Rosenthal (Super. Ct. L.A. County, 2005, No. BC344811)).
While the quiet title action was pending, Zelen's attorney sent a letter, dated December 5, 2006, to the LaRoses' attorney, saying: "Mr. Zelen wants to collect his judgment at this time. Rather than sit back and wait for the outcome of the pending [quiet title] action, it is my opinion that unless your clients will pay the judgment in full at this time, it would be best to commence a separate action against both Patricia Rosenthal and your clients for fraudulent conveyance . . . ."
Three days later, the LaRoses' attorney responded by letter: "Your letter reflects a misunderstanding as to what is occurring in this matter. . . . [Y]our client's abstract of judgment precedes [the LaRoses'] deed of trust and the [grant] deed in lieu of foreclosure. [¶] . . . [¶] An abstract of judgment runs with the land and your client's lien precedes the lien held by my clients. If, in fact, the [mortgagee] forecloses due to the failure of Rosenthal to make payment, you and the other judgment creditor ahead of my clients will be able to bid at the foreclosure sale in an attempt to protect your judgment. [¶] If you file a fraudulent conveyance action, I will view that as so flagrantly lacking in merit that my clients, upon prevailing, will have no alternative but to institute a malicious prosecution suit . . . ."
On December 14, 2006, Zelen's attorney sent a letter in reply, stating, ". . . [I]f I do not have a commitment on the part of [the LaRoses] to pay Mr. Zelen's judgment in full by the close of business on the 15th, I will proceed with the fraudulent conveyance."
The quiet title action was tried to the court. Rosenthal prevailed. In its statement of decision, dated December 14, 2007, the superior court explained that the grant deed was intended to serve as a "security device" for the LaRoses' two loans and was not a grant of a fee simple interest. Rosenthal retained title and possession of the home.
On January 4, 2007, Zelen filed an action against the LaRoses to "set aside and/or annul fraudulent conveyances." Four months later, Zelen filed a first amended complaint (complaint). Zelen alleged that the December 17, 2004 grant deed in lieu of foreclosure was made with the intent to hinder, delay, or defraud Rosenthal's creditors. The complaint sought to set aside the deed.
On July 18, 2007, the LeRoses' attorney wrote another letter to Zelen's attorney, urging him to drop the fraudulent conveyance suit: "For the last time, I will reiterate once again that your client's abstract of judgment is superior to the LaRoses' trust deed and [grant] deed in lieu of foreclosure. [¶] . . . [¶]. . . In one last attempt to restore sanity to this matter, my clients will accept a dismissal, without prejudice, with a waiver of costs, attorney fees and all claims for abuse of process and malicious prosecution if the dismissal is filed . . . by the close of business on July 25, 2007." Zelen rejected the offer and proceeded to take discovery.
At some point after Zelen's attorney received the July 18, 2007 letter, the two attorneys met in the courthouse hallway after a law and motion matter. Zelen's attorney stated, "`the LaRoses' problems could go away if they would pay Zelen.'"
Almost a year after the July 18, 2007 letter, the LaRoses successfully moved for summary judgment. The record does not include any court documents explaining the basis of the motion or the court's ruling. Judgment was entered in favor of the LaRoses on June 2, 2008.
On May 27, 2009, the LaRoses filed the present action for malicious prosecution against Zelen and his attorney (collectively Zelen). The complaint alleged that Zelen brought the fraudulent conveyance suit without probable cause and with malice. It stated in part: "The abstract of judgment which Defendant Zelen recorded on April 4, 2003 against [Rosenthal's] property . . . was always superior to and senior to the grant deed [in lieu of foreclosure] that [the LaRoses] recorded on May 17, 2005. As a matter of law, the abstract of judgment created a judgment lien that attached to the . . . property. Defendant Zelen always had the ability to enforce that judgment lien by way of levy and sale of the property. There was no fraudulent conveyance that put the property beyond the creditor's reach, and there was no damage, because Defendant Zelen could always levy and sell the . . . property even to this date."
On July 16, 2009, Zelen filed an anti-SLAPP motion, arguing that the LaRoses could not make a prima facie showing they would prevail on the merits of the malicious prosecution action. The LaRoses filed opposition. Zelen filed objections to the LaRoses' evidence.
The motion was heard on August 7, 2009. After argument, the trial court took the matter under submission. By order dated August 11, 2009, the court denied the motion, stating: "In this case, there is no evidence that the LaRoses' acceptance of the deed put Rosenthal's property beyond the reach of a superior lien holder. The plaintiffs have therefore established a prima facie case of malicious prosecution. They have submitted evidence that they placed Zelen and his attorney on notice of potential malicious prosecution [before the fraudulent conveyance suit] was filed and did so again while the [suit] remained pending. The LaRoses have also supplied evidence of malice in the sense of prosecution for an improper motive, i.e., the alleged out of court statement by Zelen's counsel suggesting that if the LaRoses would pay some money, their problems with Zelen would go away." The trial court also awarded the LaRoses $3,750 in attorney fees. It did not rule on Zelen's evidentiary objections. Zelen filed this appeal.
Zelen contends the LaRoses did not establish a prima facie showing they would prevail at trial on their malicious prosecution claim. He also argues that an award of attorney fees to the LaRoses was improper. Last, he challenges the trial court's failure to rule on his objections to the LaRoses' evidence.
We conclude the LaRoses made the requisite showing of probable success on the merits. Their grant deed in lieu of foreclosure — found to be a security device in the quiet title action — was inferior and junior to Zelen's judgment and did not harm his interests in collecting on the judgment. Zelen's insistence that the LaRoses pay the amount of his judgment against Rosenthal is sufficient proof of malice, that is, he used a fraudulent conveyance action, not to declare a transfer invalid, but to obtain money from a junior lienholder to satisfy a judgment against a common debtor. Further, the award of attorney fees was appropriate because the anti-SLAPP motion was frivolous; no reasonable attorney would have thought it tenable. Last, although the trial court failed to rule on Zelen's objections, he does not argue on appeal that any or all of them should have been sustained. His challenge is therefore forfeited.
The anti-SLAPP statute protects persons "from interference with the valid exercise of their constitutional rights, particularly the right of freedom of speech and the right to petition the government for the redress of grievances." (Contemporary Services Corp. v. Staff Pro Inc. (2007) 152 Cal.App.4th 1043, 1052.)
The statute provides: "A cause of action against a person arising from any act of that person in furtherance of the person's right of petition or free speech under the United States Constitution or the California Constitution in connection with a public issue shall be subject to a special motion to strike, unless the court determines that the plaintiff has established that there is a probability that the plaintiff will prevail on the claim." (§ 425.16, subd. (b)(1).) The statute is to "be broadly construed to encourage continued participation in free speech and petition activities." (Wanland v. Law Offices of Mastagni, Holstedt & Chiurazzi (2006) 141 Cal.App.4th 15, 22; see § 425.16, subd. (a).)
"As used in [the anti-SLAPP statute], `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: (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." (§ 425.16, subd. (e), italics added.)
"[S]ection 425.16 requires that a [trial] court engage in a two-step process when determining whether a defendant's anti-SLAPP motion should be granted. First, the [trial] court decides whether the defendant has made a threshold showing that the challenged cause of action is one `arising from' protected activity. (§ 425.16, subd. (b)(1).) If the court finds such a showing has been made, it then must consider whether the plaintiff has demonstrated a probability of prevailing on the claim." (City of Cotati v. Cashman (2002) 29 Cal.4th 69, 76.)
Put another way, "a defendant seeking to strike a plaintiff's complaint under section 425.16 has the burden of making a prima facie showing that the plaintiff's allegations are subject to that section. . . . Only if the defendant satisfies that burden, will it then fall to the plaintiff to establish the required `probability' of success. . . . The defendant's burden requires that it demonstrate that the plaintiff's cause of action arose from some act of the defendant that was taken in furtherance of the defendant's constitutional rights of petition or free speech." (Gallimore v. State Farm Fire & Casualty Ins. Co. (2002) 102 Cal.App.4th 1388, 1397, italics omitted; accord, Club Members for an Honest Election v. Sierra Club (2008) 45 Cal.4th 309, 315-316.)
"In making its determination, the [trial] court shall consider the pleadings, and supporting and opposing affidavits stating the facts upon which the liability or defense is based." (§ 425.16, subd. (b)(2).) We review the trial court's decision de novo. (HMS Capital, Inc. v. Lawyers Title Co. (2004) 118 Cal.App.4th 204, 212.)
Here, the LaRoses' claim for malicious prosecution is based on Zelen's filing and pursuit of civil litigation, that is, the fraudulent conveyance action. The complaint in this case is therefore subject to the anti-SLAPP statute. (See Jarrow Formulas, Inc. v. LaMarche (2003) 31 Cal.4th 728, 736-741 & fn. 6; Briggs v. Eden Council for Hope & Opportunity (1999) 19 Cal.4th 1106, 1115.)
It follows that the LaRoses have the burden — in the words of the statute — "[to] establish[] that there is a probability that [they] will prevail on [their] claim." (§ 425.16, subd. (b)(1).) "The term `probability' is synonymous with `reasonable probability.'" (Schoendorf v. U.D. Registry, Inc. (2002) 97 Cal.App.4th 227, 238.)
"The plaintiff's showing of facts must consist of evidence that would be admissible at trial. . . . The court cannot weigh the evidence, but must determine whether the evidence is sufficient to support a judgment in the plaintiff's favor as a matter of law, as on a motion for summary judgment. . . . If the plaintiff presents a sufficient prima facie showing of facts, the moving defendant can defeat the plaintiff's evidentiary showing only if the defendant's evidence establishes as a matter of law that the plaintiff cannot prevail." (Hall v. Time Warner, Inc. (2007) 153 Cal.App.4th 1337, 1346, citations omitted.) "[T]he court's responsibility is to accept as true the evidence favorable to the plaintiff." (HMS Capital, Inc. v. Lawyers Title Co., supra, 118 Cal.App.4th at p. 212.)
To prevail on their cause of action for malicious prosecution, the LaRoses must prove they were previously sued on a claim brought without probable cause, initiated with malice, and pursued to a termination in their favor. (See Slaney v. Ranger Ins. Co. (2004) 115 Cal.App.4th 306, 318.) There is no dispute here that the prior action terminated in their favor.
"Probable cause is a low threshold designed to protect a litigant's right to assert arguable legal claims even if the claims are extremely unlikely to succeed. `[T]he standard of probable cause to bring a civil suit [is] equivalent to that for determining the frivolousness of an appeal . . ., i.e., probable cause exists if "any reasonable attorney would have thought the claim tenable." . . . This rather lenient standard for bringing a civil action reflects "the important public policy of avoiding the chilling of novel or debatable legal claims." . . . Attorneys and litigants . . . "`have a right to present issues that are arguably correct, even if it is extremely unlikely that they will win. . . .'" . . . Only those actions that "`any reasonable attorney would agree [are] totally and completely without merit'" may form the basis for a malicious prosecution suit. . . .'" (Plumley v. Mockett (2008) 164 Cal.App.4th 1031, 1047-1048, citations omitted; accord, Wilson v. Parker, Covert & Chidester (2002) 28 Cal.4th 811, 822.) "Malicious prosecution . . . includes continuing to prosecute a lawsuit discovered to lack probable cause." (Zamos v. Stroud (2004) 32 Cal.4th 958, 973.)
"`Probable cause may be present even where a suit lacks merit. Favorable termination of the suit often establishes lack of merit, yet the plaintiff in a malicious prosecution action must separately show lack of probable cause. 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 reasonable lawyers agree totally lack merit — that is, those which lack probable cause — are the least meritorious of all meritless suits. Only this subgroup of meritless suits present[s] no probable cause.'" (Jarrow Formulas, Inc. v. LaMarche, supra, 31 Cal.4th at p. 743, fn. 13.)
"`"The `malice' element of the malicious prosecution tort relates to the subjective intent or purpose with which the defendant acted in initiating the prior action . . . ." "The malice required in an action for malicious prosecution is not limited to actual hostility or ill will toward [the] plaintiff but exists when the proceedings are instituted primarily for an improper purpose. . . ." . . .' . . . . Although lack of probable cause alone does not automatically equate to a finding of malice, it is a factor that may be considered. . . . `[M]alice may still be inferred when a party knowingly brings an action without probable cause. . . .'" (Ross v. Kish (2006) 145 Cal.App.4th 188, 204, citations omitted.)
The LaRoses' evidence shows there is a reasonable probability they will prevail on their malicious prosecution claim. The grant deed in lieu of foreclosure did not harm Zelen's ability to collect on his judgment or affect his interest in Rosenthal's property. Zelen recorded his abstract of judgment on April 3, 2003; the LaRoses recorded the grant deed in lieu of foreclosure on May 17, 2005. As between the parties, Zelen's judgment was senior and superior.
The recording of the abstract of judgment created a judgment lien on Rosenthal's property. (See § 697.310, subd. (a).) The lien remained in effect for 10 years and could have been renewed for an additional 10 years. (See §§ 697.310, subd. (b), 683.180-683.210.) A judgment lien may be enforced by levy and sale of the real property, and the property remains subject to the lien even if the property is transferred or encumbered. (See § 697.390, subd. (a); Dieden v. Schmidt (2002) 104 Cal.App.4th 645, 651-652.)
"Under some circumstances a creditor may sue to set aside a transfer of property by a debtor, where the transfer defrauds that creditor. . . . A well-established principle of the law of fraudulent transfers is, `A transfer in fraud of creditors may be attacked only by one who is injured thereby. Mere intent to delay or defraud is not sufficient; injury to the creditor must be shown affirmatively. In other words, prejudice to the plaintiff is essential. It cannot be said that a creditor has been injured unless the transfer puts beyond [her] reach property [she] otherwise would be able to subject to the payment of [her] debt.' . . .
"Plaintiff contends this is an obsolete requirement that is no longer the law. She points out that it was once expressly stated in former Civil Code section 3441, which was repealed in 1939 upon adoption of the Uniform Fraudulent Conveyance Act . . . . But Haskins [v. Certified Escrow & Mtge. Co. (1950) 96 Cal.App.2d 688, 691] itself goes on to state, `We think the repeal of the section is not significant since it was merely declaratory of an established principle of equity.' . . . Contrary to plaintiff's contention, this concept remains implied by the current statutory language . . . ." (Mehrtash v. Mehrtash (2001) 93 Cal.App.4th 75, 80, citations & fn. omitted.)
None of the LaRoses' actions caused injury to Zelen's judgment lien or his ability to collect on the judgment. And even if a transfer made with the intent to delay, hinder, or defraud would support a fraudulent conveyance action (see Civ. Code, § 3439.04, subd. (a)(1)), there was no evidence — as opposed to speculation and conclusory statements — of such an intent here.
Nor did the LaRoses' quiet title action affect Zelen's judgment lien or interest in the property. He was not named as a defendant in that action, had no obligation to intervene, and was therefore not bound by the judgment. (See §§ 762.010, 764.045; Gerhard v. Stephens (1968) 68 Cal.2d 864, 906-910; Taliaferro v. Riddle (1958) 166 Cal.App.2d 124, 127-128.)
As for malice, Zelen's attorney demanded in two letters, dated December 5 and December 14, 2006, that the LaRoses pay Zelen the full amount of Zelen's judgment against Rosenthal. There was no legal basis for that demand. The LaRoses had nothing to do with the conduct that gave rise to Rosenthal's liability under the judgment. Similarly, there was no legitimate basis for the comment by Zelen's attorney to the LaRoses' attorney that the LaRoses' problems could go away if they paid Zelen. In short, the purpose of a fraudulent conveyance suit is to declare a transfer invalid, not to permit a senior lienholder to recover from a junior lienholder the amount of a judgment the senior lienholder has against the common debtor. Zelen's demands for full payment of the judgment indicated he was pursuing the fraudulent conveyance action for an improper purpose: the collection from the LaRoses on his judgment against Rosenthal, not the invalidation of the LaRoses' grant deed in lieu of foreclosure. Indeed, the LaRoses' attorney informed Zelen in two letters that, based on the law of judgments and liens, a fraudulent conveyance suit against the LaRoses would be frivolous. Nevertheless, Zelen filed and maintained such a suit.
In sum, the evidence indicates that no reasonable attorney would have thought a fraudulent conveyance action against the LaRoses was tenable. Accordingly, the LaRoses established a prima facie showing of success at trial on their malicious prosecution claim.
"`If the court finds that a special motion to strike is frivolous . . ., the court shall award costs and reasonable attorney's fees to a plaintiff prevailing on the motion, pursuant to Section 128.5.' . . . Thus, the imposition of sanctions for a frivolous anti-SLAPP motion is mandatory. . . . [¶] . . . A determination of frivolousness requires a finding the anti-SLAPP `motion is "totally and completely without merit" (§ 128.5, subd. (b)(2)), that is, "`"any reasonable attorney would agree such motion is totally devoid of merit." . . .' . . . We review the trial court's order for an abuse of discretion." (Moore v. Shaw (2004) 116 Cal.App.4th 182, 198-199, citation, italics & fn. omitted.)
We have already concluded that the fraudulent conveyance suit itself was frivolous: No reasonable attorney would have thought it tenable. Likewise, any reasonable attorney would have concluded the anti-SLAPP motion — an effort to justify the frivolous suit — was totally devoid of merit. Thus, the trial court did not err in awarding attorney fees against Zelen.
The trial court did not rule on any of Zelen's objections to the LaRoses' evidence. As a consequence, his objections are preserved on appeal. (See Reid v. Google, Inc. (2010) 50 Cal.4th 512, 526, 533.) But it is not sufficient for Zelen merely to point out that the trial court failed to issue a ruling. He must also discuss the objections on appeal, explaining why one or more should have been sustained. He did not do so. Absent argument as to why particular objections should have been sustained, Zelen has forfeited the point. (See Schoendorf v. U.D. Registry, Inc., supra, 97 Cal.App.4th at pp. 237-238.)
The order is affirmed.
We concur:
ROTHSCHILD, J.
CHANEY, J.
