Storix, Inc. v. Johnson CA4/1 ( 2021 )

Filed 1/27/21 Storix, Inc. v. Johnson CA4/1
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.
COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
STORIX, INC., D075308
Plaintiff and Respondent, (Super. Ct. No.
v. 37-2015-00028262-CU-BT-CTL
Consolidated under lead case
ANTHONY JOHNSON, Super. Ct. No.
37-2015-00034545-CU-BC-CTL)
Defendant and Appellant;
ANTHONY JOHNSON,
Cross-complainant and
Appellant,
v.
DAVID HUFFMAN et al.,
Cross-defendants, and
Respondents;
ANTHONY JOHNSON, D077096
Plaintiff and Appellant, (Super. Ct. No. 37-2019-
v. 00002457-CU-BT-CTL)
ORDER MODIFYING OPINION
DAVID HUFFMAN et al.,
AND DENYING REHEARING
Defendants and Respondents.
NO CHANGE IN JUDGMENT
THE COURT:
It is ordered that the opinion filed herein on December 31, 2020 be
modified as follows:
On page 14, insert the following at the end of footnote 6:
Johnson argues that the latter part of section 307(b)
applies because no court ever found that “ratifying the lawsuit
[two] years after it was filed was just and reasonable to Storix.”
The jury’s verdict in favor of Storix and the subsequent judgment
establish that Storix’s action against Johnson was just and
reasonable to Storix.
On page 23, remove the last paragraph and replace it with the following
paragraph:
“ ‘Compliance with the requirements for filing a notice of
appeal is mandatory and jurisdictional,’ and an appellate court
therefore must dismiss an appeal that is untimely.” (Starpoint
Properties, LLC v. Namvar (2011) 201 Cal.App.4th 1101, 1107.)
“An order granting or denying a special motion to strike shall be
appealable under [Code of Civil Procedure] Section 904.1.” (Code
Civ. Proc., § 425.16, subd. (i).) Code of Civil Procedure section
904.1 similarly provides that “[a]n appeal . . . may be taken . . .
[f]rom an order granting or denying a special motion to strike
under [Code of Civil Procedure] Section 425.16.” (Code Civ. Proc.,
§ 904.1, subd. (a)(13); Reyes v. Kruger (2020) 55 Cal.App.5th 58,
67 [grant]; Kyle v. Carmon (1999) 71 Cal.App.4th 901, 906
[same]; People ex rel. Lockyer v. Brar (2004) 115 Cal.App.4th
1315, 1317 [denial].) An appeal also lies if the trial court denies
the motion as to some causes of action, for example where the
complaint contains claims arising from both protected and
unprotected activity. (Baral v. Schnitt (2016) 1 Cal.5th 376, 381-
382, 394; Old Republic Construction Program Group v. The
Boccardo Law Firm, Inc. (2014) 230 Cal.App.4th 859, 866, fn. 4.)
Additionally, an attorney fees and costs award to a prevailing
defendant on an anti-SLAPP motion is directly appealable. (City
of Colton v. Singletary (2012) 206 Cal.App.4th 751, 782.)
On page 32 remove the second full paragraph, replace it with the following
paragraph and add new footnote 13 as indicated:
Johnson cited no authority in his opening brief to support
giving the disputed paragraph. In his reply brief, Johnson cited
out-of-state authority to support instructing with the disputed
2
paragraph. Out-of-state authority is not binding on California
courts. (Doe v. Occidental College (2019) 37 Cal.App.5th 1003,
1018, fn. 2.) Additionally, the cases cited by Johnson during his
rebuttal oral argument (Neider v. Dardi (1955) 130 Cal.App.2d
646 (Neider) and Brown v. Allied Corrugated Box Co. (1979) 91
Cal.App.3d 477 (Brown)) do not assist him because these cases do
not relate to this issue. [Insert new footnote 13] In any event, we
are not convinced that removal of the disputed paragraph
prejudiced Johnson.
Text of new footnote 13:
Neider, supra,130 Cal.App.2d 646 concerns the
appointment of a receiver arising from a conflict between two
joint venturers and a corporation. (Id. at p. 647.) Brown, supra,
91 Cal.App.3d 477 concerns an action by minority shareholders in
a closely held corporation to involuntarily dissolve the
corporation and an appraisal requested by the majority
shareholders to ascertain the value of the minority shares. (Id. at
pp. 479-480.) While these cases contain language that arguably
supports Johnson’s position (Neider at p. 649; Brown at p. 487),
neither case stands for the proposition that majority shareholders
may breach their fiduciary duties by denying the minority
shareholder a position with the company. (California Building
Industry Assn. v. State Water Resources Control Bd. (2018) 4
Cal.5th 1032, 1043 [a case does not stand for a proposition it does
not address].)
On page 36, renumber existing footnote 13 to footnote 14.
There is no change in judgment.
The petition for rehearing filed by Anthony Johnson is denied.
HALLER, Acting P. J.
Copies to: All parties
3
Filed 12/31/20 Storix v. Johnson CA4/1 (unmodified opinion)
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.
COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
STORIX, INC., D075308
Plaintiff and Respondent, (Super. Ct. No.
v. 37-2015-00028262-CU-BT-CTL
Consolidated under lead case
ANTHONY JOHNSON, Super. Ct. No.
37-2015-00034545-CU-BC-CTL)
Defendant and Appellant;
ANTHONY JOHNSON,
Cross-complainant and
Appellant,
v.
DAVID HUFFMAN et al.,
Cross-defendants, and
Respondents;
ANTHONY JOHNSON, D077096
Plaintiff and Appellant,
v. (Super. Ct. No. 37-2019-
00002457-CU-BT-CTL)
DAVID HUFFMAN et al.,
Defendants and Respondents.
CONSOLIDATED APPEALS from a judgment and orders of the
Superior Court of San Diego County, Kevin A. Enright and Katherine A.
Bacal, Judges. Affirmed.
Anthony Johnson, in pro. per. for Defendant, Cross-complainant,
Plaintiff, and Appellant.
Procopio, Cory, Hargreaves & Savitch, Kendra J. Hall, Paul A. Tyrell
and Sean M. Sullivan for Plaintiff and Respondent, Storix, Inc.
Wilson, Elser, Moskowitz, Edelman & Dicker and Marty B. Ready for
Cross-defendants, Defendants, and Respondents David Huffman, Richard
Turner, Manuel Altamirano, David Kinney and David Smiljkovich.
These consolidated appeals arise from business disputes between
Storix, Inc., a software company, and its founder Anthony Johnson. The
disputes resulted in several different lawsuits, three of which are before us in
this proceeding.
First, after Johnson started a new company, Storix sued Johnson for
breach of fiduciary duty, and Johnson cross-complained against certain Storix
officers and directors, alleging breach of fiduciary duty and other claims.
This lawsuit will be referred to as the fiduciary duty action. Second, Johnson
and another individual filed a shareholders’ derivative lawsuit on Storix’s
behalf against the same officers and directors. This lawsuit will be referred
to as the derivative action.
Those two lawsuits (the fiduciary duty and derivative actions) were
consolidated. A jury trial was held first on the fiduciary duty action, and the
jury returned verdicts in favor of Storix on the complaint and in favor of the
defendants on the cross-complaint. The court (Judge Enright) then held a
bench trial on the derivative action, and found the action lacked merit. The
2
court entered a single final judgment, and later entered a postjudgment order
awarding costs and fees to Storix and certain Storix directors.
In the third lawsuit, Johnson filed an action against certain Storix
directors, alleging malicious prosecution and other torts (the malicious
prosecution action). These defendants filed an anti-SLAPP motion, but
Johnson dismissed his complaint before the motion was heard. The court
(Judge Bacal) then entered an order awarding $12,237.50 in attorney fees
and $2,364.45 in costs to defendants under the anti-SLAPP statute.
Johnson filed two appeals. In the first, he challenges the final
judgment in the fiduciary duty and derivative consolidated actions. Johnson
contends the court erred in each of those actions, and in its postjudgment
orders. In his second appeal, Johnson challenges the court’s attorney fees
order in the malicious prosecution action. We consolidated these appeals.
After carefully reviewing the parties’ briefs, record, and applicable law,
we determine Johnson has not met his burden to show prejudicial error in
either appeal. We thus affirm the challenged judgment and orders.
FACTUAL AND PROCEDURAL SUMMARY1
Background
Storix develops and sells a software product called System Backup
Administrator (SBAdmin). Johnson founded Storix in 1998 as a sole
proprietor and incorporated the company in 2003. He was Storix’s only
shareholder until 2010.
1 We grant Johnson’s August 12, 2019 unopposed judicial notice request
concerning his motion to strike or tax costs. We grant Storix’s November 12,
2019 unopposed judicial notice request concerning two federal court opinions
in related proceedings. (Evid. Code, §§ 459, subd. (a), 452, subd. (d).)
3
In 2011, Johnson resigned as an officer and director of Storix after
being diagnosed with a serious health condition. He transferred
management and operational responsibilities to then-employees David
Huffman, Richard Turner, Manuel Altamirano and David Kinney. Johnson
also caused Storix to grant these individuals shares amounting to a combined
60 percent stake in Storix, in exchange for their agreement to stay with the
company for two years. Johnson retained the other 40 percent of Storix
shares. Johnson elected Huffman, Turner, Altamirano and Kinney to Storix’s
board of directors and elected Huffman as Storix’s president. In 2012, Storix
hired David Smiljkovich as its chief financial officer (CFO). We collectively
refer to Smiljkovich, Huffman, Turner, Altamirano and Kinney as the
Individual Defendants.
ln 2013, Johnson’s health crisis resolved and he began working as a
Storix employee. In May 2014, Johnson resigned his employment at Storix
citing a lack of opportunity and disagreement with the company’s vision
regarding the software.
Three months later, Johnson filed a copyright infringement action in
federal court against Storix. While the copyright infringement matter was
pending, Johnson and fellow shareholder, Robin Sassi, were elected to
Storix’s board. At that time, Storix had five board members consisting of
Johnson, Sassi, and three of the Individual Defendants (Huffman, Turner,
and Altamirano). The day after this election, Johnson incorporated Janstor
Technology (Janstor), a company that intended to sell a product based on the
SBAdmin source code. Johnson believed the Individual Defendants were
going to ruin Storix and decided to “rebrand[]” software he had been working
on at home. Johnson denied forming Janstor to compete with Storix.
4
Filing of Fiduciary Duty and Derivative Actions
In August 2015, Storix filed the fiduciary duty action against Johnson
and Janstor. Storix alleged Johnson breached his fiduciary duties by forming
Janstor to compete with Storix.
The following month, on September 26, Johnson sent an email to
Storix’s management and employees entitled “Buckle Up Boys!,” threatening
to send an email to Storix’s customers informing them of mismanagement at
Storix. Johnson demanded the other Storix shareholders give up their
ownership interests, resign their board positions and end their employment,
saying this was the only way to save the jobs of Storix employees. Within two
weeks, Johnson sent an email to Storix’s customers (the customer email)
informing them of the pending copyright litigation and asking them to stop
paying Storix for the software. We discuss this email in detail in Discussion,
Part II.A.3.
After Johnson sent the customer email, Storix amended its fiduciary
duty complaint to allege Johnson breached his fiduciary duties by sending the
email because it allegedly tarnished Storix’s reputation. Storix later added
an allegation that Johnson breached his fiduciary duties by stealing a copy of
Storix’s source code to create a competing product. Storix claimed $1.2
million in damages based on the “unfair head start” Johnson obtained by
wrongfully using Storix’s source code to create a competing product. Storix
also asserted damages based on the expenses it incurred to protect its
customer relationships after Johnson sent the customer email.
Johnson cross-complained against the Individual Defendants alleging
claims for breach of fiduciary duty, fraud, and conspiracy. Johnson claimed
these defendants breached fiduciary duties owed to him by, among other
things, using their majority control of Storix to oust him from the company,
5
acting in concert to file suit in Storix’s name without Storix’s approval to
economically harm him, and by denying him a position with the company.
In response, the Individual Defendants filed an anti-SLAPP motion to
strike Johnson’s entire cross-complaint. The court granted the motion in part
and struck certain allegations. The court issued an order granting the
Individual Defendants’ attorney fees and costs incurred on the motion.2
In October 2015, Johnson and Sassi filed the derivative action
purportedly on Storix’s behalf against the Individual Defendants, asserting
causes of action for breach of fiduciary duty, abuse of control, corporate
waste, and accounting. Johnson and Sassi alleged these defendants breached
fiduciary duties owed to Storix by, among other things, neglecting the
software after taking control of the company, acting to promote their
financial self-interest at Storix’s expense, and failing to adhere to corporate
formalities.
In December 2015, a jury in Johnson’s federal copyright infringement
action found in Storix’s favor on the infringement claim.3
Trial Proceedings in Fiduciary Duty and Derivative Actions
Meanwhile, in the superior court, the fiduciary duty action (complaint
and cross-complaint) and the derivative action were consolidated. In pretrial
rulings relevant to this appeal, the trial court (1) precluded Johnson from
testifying as an expert witness on corporate governance issues; (2) precluded
Johnson from presenting evidence at the jury trial on Johnson’s cross-
2 As we will discuss, Johnson did not timely appeal from these orders.
3 The district court awarded Storix attorney fees and costs under the
Copyright Act, finding Johnson’s “motives were not merely to secure a
copyright infringement judgment, but also to wrest control of the company
from its majority shareholders and to force the company to ‘close its doors.’ ”
6
complaint about any claimed damages that impacted all Storix shareholders
equally; (3) rejected Johnson’s argument the customer email was protected by
the litigation privilege; (4) denied Johnson’s request to exclude the customer
email from evidence; and (5) reserved ruling on the Individual Defendants’
motion challenging Johnson and Sassi’s standing to file the derivative action
on Storix’s behalf.
The court first held the jury trial in the fiduciary breach action. After a
10-day trial with 13 witnesses and an exhibit list identifying 902 exhibits, the
jury returned a verdict in Storix’s favor on its breach of fiduciary duty claim
and found Storix suffered $3,739.14 in damages. The jury rejected Storix’s
argument it had incurred damages of approximately $1.2 million for
Johnson’s act of using Storix’s source code to create a competing product. The
jury also found in favor of the Individual Defendants on all causes of actions
in Johnson’s cross-complaint.4
At the later bench trial on the derivative action, the court dismissed
Johnson for lack of standing, finding he was an inadequate shareholder
derivative plaintiff based on the jury’s verdict against him. The bench trial
proceeded with Sassi as the sole plaintiff. The court then found in favor of
the Individual Defendants on all causes of action in the derivative action.
The court denied Johnson’s motion to release his shareholder-plaintiff’s bond.
The court then entered a consolidated judgment, reflecting the findings
in favor of Storix and the Individual Defendants. The court later awarded
costs and fees to these parties for prevailing in the actions.
4 Storix obtained a default judgment against Janstor.
7
Malicious Prosecution Action
Soon after, Johnson filed the malicious prosecution action against the
Individual Defendants (except for CFO Smiljkovich), alleging malicious
prosecution and other torts. These defendants filed an anti-SLAPP motion to
strike this complaint. Before the court ruled on the motion, Johnson
dismissed his complaint without prejudice. The court then awarded
$12,237.50 in attorney fees and $2,364.45 in costs to the defendants.
DISCUSSION
I. General Legal Principles Governing Appeals
On appeal, we evaluate factual findings under the substantial evidence
standard. (Bowers v. Bernards (1984) 150 Cal.App.3d 870, 873-874.)
Conflicts in the evidence must be resolved in favor of the judgment and if two
or more inferences can be reasonably drawn from the facts, the reviewing
court must accept the inferences deduced by the trial court. (Green v. Board
of Dental Examiners (1996) 47 Cal.App.4th 786, 796.) We review the court’s
legal determinations independently under the de novo standard. (Ibid.)
A judgment is presumed correct, all presumptions are indulged to
support it on matters as to which the record is silent, and an appellant must
affirmatively demonstrate error. (Jameson v. Desta (2018) 5 Cal.5th 594,
608-609.) Although Johnson is representing himself in this litigation,
appellate rules apply with equal force to self-represented parties. (Rappleyea
v. Campbell (1994) 8 Cal.4th 975, 984-985.) A litigant “appearing in propria
persona, . . . is entitled to the same, but no greater, consideration than other
litigants and attorneys.” (Nelson v. Gaunt (1981) 125 Cal.App.3d 623, 638.)
“Appellate briefs must provide argument and legal authority for the
positions taken. ‘When an appellant fails to raise a point, or asserts it but
fails to support it with reasoned argument and citations to authority, we
8
treat the point as waived.’ ” (Nelson v. Avondale Homeowners Assn. (2009)
172 Cal.App.4th 857, 862.) “We are not bound to develop appellants’
arguments for them. [Citation.] The absence of cogent legal argument or
citation to authority allows this court to treat the contentions as waived.” (In
re Marriage of Falcone & Fyke (2008) 164 Cal.App.4th 814, 830.)
Mindful of these rules, we consider Johnson’s appellate contentions
challenging the court’s rulings on (1) the fiduciary duty action (complaint and
cross-complaint); (2) the derivative action; (3) the cost and attorney fees
orders pertaining to the consolidated final judgment; and (4) the attorney fees
order on the malicious prosecution action.
II. Fiduciary Duty Action
A. Storix’s Breach of Fiduciary Duty Claims Against Johnson
Johnson contends the judgment against him for breach of fiduciary
duty must be reversed for several reasons. First, he contends Storix lacked
standing or the capacity to bring the action against him. Second, Johnson
maintains Storix was required to file a shareholders’ derivative suit, not a
direct action, and that Storix should be judicially estopped from asserting its
direct action was valid. Third, Johnson argues the court prejudicially erred
by permitting the jury to consider the customer email to support Storix’s
breach of fiduciary duty claim. Fourth, he challenges the court’s denial of his
postjudgment motions. We address each of these arguments below.
1. Storix’s Standing, Capacity, or Authority to File the Lawsuit
Johnson contends Storix lacked standing to bring the action. This
contention lacks merit.
“Every action must be prosecuted in the name of the real party in
interest[.]” (Code Civ. Proc., § 367.) “[S]tanding to sue—the real party in
interest requirement—goes to the existence of a cause of action, i.e., whether
9
the plaintiff has a right to relief.” (American Alternative Energy Partners II
v. Windridge, Inc. (1996) 42 Cal.App.4th 551, 559.) “The purpose of a
standing requirement is to ensure that the courts will decide only actual
controversies between parties with a sufficient interest in the subject matter
of the dispute to press their case with vigor.” (Common Cause v. Board of
Supervisors (1989) 49 Cal.3d 432, 439.) “Lack of standing may be raised at
any time in the proceeding, including at trial or in an appeal.” (Blumhorst v.
Jewish Family Services of Los Angeles (2005) 126 Cal.App.4th 993, 1000.)
Under these principles, Storix had legal standing. Storix (as a
corporation) allegedly suffered damages from Johnson’s breach of fiduciary
duties. Thus, it had a right to bring an action to seek relief. (See Grosset v.
Wenaas (2008) 42 Cal.4th 1100, 1108 (Grosset); CLD Construction, Inc. v. City
of San Ramon (2004) 120 Cal.App.4th 1141, 1150.)
Johnson alternatively argues Storix was not a proper plaintiff because
it did not have the authority or capacity to file the lawsuit claiming its board
never approved the complaint or ratified its filing.
Under California law, a corporation ordinarily has the legal authority
or capacity to sue. (Corp. Code, § 207.)5 “An allegation by a plaintiff that it
is a corporation is sufficient to show that it has the general capacity to sue.”
(Color-Vue, Inc. v. Abrams (1996) 44 Cal.App.4th 1599, 1605.) “[A] plea in
abatement such as lack of capacity to sue ‘must be raised by defendant at the
earliest opportunity or it is waived. . . . The proper time to raise a plea in
abatement is in the original answer or by demurrer at the time of the
answer.’ ” (Id. at p. 1604.)
5 Undesignated statutory references are to the Corporations Code.
10
Storix initially contends Johnson waived his legal-capacity challenge by
failing to assert it as an affirmative defense in his answer. We reject this
argument. The record reflects that throughout the litigation, Johnson
challenged Storix’s capacity to sue, including in a demurrer, summary
judgment motion, and at trial.
But we agree with Storix that Johnson’s challenge is unsupported on
its merits. “It is well settled that a corporation may sue upon authorization
of its board of directors or upon the initiative of its president or managing
officer.” (American Center for Education, Inc. v. Cavnar (1978) 80 Cal.App.3d
476, 498, superseded by statute on other ground as stated in Patton v.
Sherwood (2007) 152 Cal.App.4th 339, 346; accord Grosset, supra, 42 Cal.4th
at p. 1108.) Additionally, a corporation has an inherent right to sue without
the board adopting a resolution specifically authorizing the action. (Canal
Oil Co. v. National Oil Co. (1937) 19 Cal.App.2d 524, 537.) The validity of
corporate acts generally constitute questions of law, “but the answers to such
questions may, of course, involve factual issues.” (American Center, at p. 485,
fn. 3.)
When Storix filed its action against Johnson, its board was comprised
of Huffman, Turner, Altamirano, Johnson and Sassi. Sassi was Johnson’s
coplaintiff in the derivative action and Johnson described her as his best
friend. Storix’s bylaws provided that, subject to the board’s control, the
president has general supervision, direction, and control of the corporation’s
business. Additionally, corporate officers are considered agents of the
corporate entity in their dealings with third persons. The corporation is
bound by such dealings, if they were “within the scope of the authority, actual
or apparent, conferred by the board or within the agency power of the officer
executing it. . . .” (§ 208, subd. (b).)
11
At trial, Huffman, Storix’s president and chief executive officer,
testified Storix was a small company that operated without much formality.
For example, he noted that three board members voted to approve his salary
increase, but no noticed board meeting occurred, nor were minutes created.
He described the action as the three board members being in the office
together, talking, and then voting. Huffman testified he approved filing the
action against Johnson after discussing it with Turner and Altamirano, but
admitted the discussion did not occur at a recognized board meeting.
Both Turner and Altamirano confirmed they reviewed the complaint
against Johnson and consented to its filing. Huffman and Turner explained
it was pointless to discuss the issue with Johnson and Sassi, the remaining
two board members, because the decision to file the action was against
Johnson. Turner’s and Altamirano’s knowledge of the proposed complaint
against Johnson evidenced Huffman’s capacity to institute the litigation on
Storix’s behalf.
Moreover, Johnson’s cross-complaint alleged Storix was a closely held
corporation. Status as a close corporation allows the participants to act “akin
to a partnership in its informality.” (Hecht v. Superior Court (1987) 192
Cal.App.3d 560, 565; see § 158, subd. (a).) Critically, shareholders of a
statutory close corporation can bypass the board of directors or “dispense
with the board of directors entirely and authorize the shareholders
themselves to adopt bylaws, elect officers and do whatever else directors do.”
(Friedman et al., Cal. Practice Guide: Corporations (The Rutter Group 2020)
¶ 3:249, p. 3-57, citing § 300, subd. (b).)
Further, even assuming board president Huffman lacked the capacity
(without formal board approval) to institute the litigation against Johnson on
Storix’s behalf, the evidence shows the Storix board later ratified the action
12
during a special board meeting at which the then-directors (Huffman,
Altamirano and Smiljkovich) voted to ratify the earlier decision of Huffman,
Altamirano and Turner to file the lawsuit. Sassi and Johnson voted against
the ratification.
An action within the authority of a corporate board may be ratified
“through a resolution of its board of directors when duly assembled.” (John
Paul Lumber Co. v. Agnew (1954) 125 Cal.App.2d 613, 622.) Absent prejudice
to third parties, ratification is retroactive in effect. (Civ. Code, § 2313; Meyers
v. El Tejon Oil & Refining Co. (1946) 29 Cal.2d 184, 187 (Meyers).)
To avoid a ratification finding, Johnson relies on Dominguez v. Superior
Court (1983) 139 Cal.App.3d 692. In Dominguez, the post-filing ratification of
a complaint was ineffective because it would have prejudiced a third party by
precluding the defendant from asserting a statute of limitations defense and
undermined the pertinent statutory scheme. (Id. at p. 695.) Such facts do
not exist here, nor is the statutory scheme weakened.
Citing section 310, subdivision (a)(2), Johnson maintains that a
ratification could occur only without counting the votes of interested
directors, thus eliminating Huffman, Altamirano and Smiljkovich because
they were defendants in Johnson’s derivative action. However, this section
applies only to a “transaction between a corporation and one or more of its
directors, or between a corporation and any corporation . . . in which one or
more of its directors has a material financial interest . . . .” By its language,
the section is inapplicable.
Relying on section 307, subdivision (b), Johnson contends any action
taken by a board without a meeting requires the written consent of all
13
directors, not just the majority.6 Although this provision identifies one way
an action may be instituted, it is not exclusive. As noted, Storix’s president
had the capacity to file the complaint on Storix’s behalf without board
approval. Moreover, to the extent board consent may have been required, the
board later ratified Huffman’s action and the ratification had retroactive
effect. (Meyers, supra, 29 Cal.2d at p. 187.) On these facts, section 307,
subdivision (b) does not apply.7
In a related argument, Johnson contends the trial court erred by not
allowing the jury to decide this factual issue in the special verdict form and
by the court making this finding as a matter of law after the jury trial.
However, Johnson did not preserve this challenge because he never objected
to the special verdict form and his counsel consented to the form. The record
reflects that during the recorded hearing on the jury instructions and special
verdict form, the trial court noted the issue presented a question of law for
the court to decide (because it was undisputed that three of five Storix
directors voted to proceed with the action), and Johnson’s counsel did not
object to this conclusion.
6 Section 307, subdivision (b) provides: “An action required or permitted
to be taken by the board may be taken without a meeting, if all members of
the board shall individually or collectively consent in writing to that action
and if the number of members of the board serving at the time constitutes a
quorum. . . . [I]n any suit brought to challenge the action, the party asserting
the validity of the action shall have the burden of proof in establishing that
the action was just and reasonable to the corporation at the time it was
approved.”
7 Because sections 307 and 310 do not apply, the trial court did not err by
rejecting Johnson’s proposed special jury instruction on whether the lawsuit
was unanimously approved in writing by the board, or whether disinterested
directors or shareholders approved or ratified the lawsuit at a noticed
director’s or shareholder’s meeting.
14
2. Storix was Not Required to Bring a Shareholder’s Derivative Action
Johnson next argues Storix’s fiduciary duty complaint should have
been dismissed because it was not filed as a shareholder’s derivative action.
A shareholder’s derivative suit was unnecessary because Storix’s
directors had the right to bring the lawsuit in Storix’s name to remedy
perceived wrongs against the entire corporation. (See Grosset, supra, 42
Cal.4th at p. 1108.) A shareholders’ derivative lawsuit is brought by
shareholders to enforce the corporation’s rights when the managing board
“fails or refuses to do so.” (Ibid., italics added.) Here, the corporation brought
the action so a derivative action was unnecessary.
Johnson cites Anmaco, Inc. v. Bohlken (1993) 13 Cal.App.4th 891 for
the proposition that a director is prohibited from instituting litigation in the
name of a corporation against a co-director and that the proper vehicle for
this suit is a shareholders’ derivative action. Anmaco is distinguishable
because in that case the corporation consisted of only two corporate directors,
each a 50 percent shareholder, and the corporate bylaws did not permit one
shareholder-director to sue the other in the corporation’s name. (Id. at
pp. 895, 898.) Under these circumstances, the court found one director could
not bring an action “where the other shareholder-director could claim equal
authority to bring suit in the corporate name.” (Id. at p. 900.)
The situation here is different. The majority board had the authority to
bring a lawsuit to recover for the corporation’s damages allegedly caused by
one of the shareholders/directors. Storix was authorized to file this action to
protect the corporation from Johnson’s alleged breaches of fiduciary duty, and
no shareholder was required to bring a shareholders’ derivative lawsuit to
make the identical claim.
15
Johnson also asserts the judicial estoppel doctrine precludes Storix
from arguing that its action was properly brought in its own name. In
support, he notes that the court barred him from relying on evidence of
injuries suffered by other shareholders to support his own fiduciary duty
claims in his cross-complaint against the Individual Defendants.
Judicial estoppel is “ ‘ “an equitable doctrine invoked by a court at its
discretion . . . [and] most commonly applied to bar a party from making a
factual assertion in a legal proceeding which directly contradicts an earlier
assertion made in the same proceeding or a prior one.” ’ ” (International
Engine Parts, Inc. v. Feddersen & Co. (1998) 64 Cal.App.4th 345, 350, italics
added.) The doctrine protects the integrity of the judiciary by preventing
fraud on the courts. (Thomas v. Gordon (2000) 85 Cal.App.4th 113, 118.)
This doctrine does not apply here because neither Storix nor the
Individual Defendants made contradictory assertions on the same issue.
Storix (the corporation) and Johnson (a shareholder/director/individual) were
not similarly situated with respect to their rights to seek redress. Storix
brought its claim against Johnson to seek relief for injuries to the corporation;
whereas Johnson filed his cross-complaint seeking compensation for his own
injuries. Moreover, contrary to Johnson’s assertions, neither Storix nor the
Individual Defendants argued Johnson’s entire cross-complaint should have
been brought as a derivative action. Rather, defendants argued a portion of
Johnson’s damages claim did not solely impact Johnson, but impacted all
Storix shareholders and was thus more appropriately decided in the
derivative action. Johnson’s counsel agreed with the general assertion, and
16
so do we. (See Jones v. H.F. Ahmanson & Co. (1969) 1 Cal.3d 93, 107
(Jones).) On this record the concept of judicial estoppel is inapplicable.8
3. Customer Email and Application of Litigation Privilege
Johnson contends the court erred in overruling his objections to the
admission of the customer email.
a. Background
After Johnson filed his copyright infringement action against Storix
and Storix filed its action against him, Johnson sent the customer email to
Storix customers. The subject matter on the email was “Notice of Copyright
Infringement by Storix, Inc.” The email began:
“This letter is to inform you that you may be in possession
of unauthorized and infringing copies of [SBAdmin]. I am
the author of the software, which is protected by
[identifying copyright number], and expert testimony in
[the federal copyright action] has indisputably determined
that I am the owner, have never transferred, nor received
any consideration for its license by Storix.
“I hold none of Storix’ customers or business partners
accountable, and you may continue using the current
software, even if you received an infringing license after it
was revoked. However, I must demand that you cease any
further payment to Storix in relation to this software and
refrain from downloading any further copies.”
The email then identified the Storix directors; discussed Johnson’s disputes
with these directors, and described the nature and purpose of the pending
copyright lawsuit. The email concluded:
8 We note that Johnson has not directed us to any portion of the record
where the trial court erroneously prevented him from presenting evidence to
support the claims or damages he alleges he personally suffered as a result of
respondents’ conduct.
17
“Although a plaintiff in the copyright case, I’m also a 40%
shareholder and a director of the company, and am
obligated to do everything possible to put an end to this
nonsense before the company is lost. I would have
preferred the customers and employees remain unaware of
this needless battle, but the actions taken by these
individuals to protect their majority positions have resulted
in the company becoming unprofitable for the first time in
its history. They will accept no personal responsibility or
compromise, and are now turning to a new employee stock
incentive program to cover their losses. This nonsense
cannot continue.
“The security enhancements to the software have been
completed, along with much more. Unfortunately, far too
much damage has been done to me personally and
financially to allow these greedy individuals to profit from
my work any longer. Many of you I had worked with
personally for many years, so it pains me to inform you that
support for [SBAdmin] will very likely end when a ruling is
made in the copyright case at the end of the month.”
Johnson moved in limine to exclude this email, arguing it was directly
related to his copyright action against Storix and thus should be excluded
under the litigation privilege. After considering counsels’ arguments, the
trial court denied the motion. Before and during defendant Huffman’s
testimony about this email, Johnson reasserted his objection, but the court
overruled the objection and permitted Huffman to testify about the email.
The email was introduced as an exhibit at trial.
During closing argument, Storix’s counsel supported its breach of
fiduciary duty claim by arguing Storix suffered damages of approximately
$1.2 million for Johnson’s act of using Storix source code to create a
competing product and damages between $2,570.86 and $3,739.14 for
employee lost productivity in addressing the fallout from the customer email.
The jury found Johnson breached his duty of loyalty by knowingly acting
18
against Storix while serving on Storix’s board and Storix suffered damages of
$3,739.14. Based on this verdict, it is clear the jury rejected Storix’s damages
claim based on Johnson creating a competing product and awarded damages
solely for Johnson’s act of sending the customer email.
b. Analysis
Johnson contends the trial court erred in denying his motion to exclude
the customer email based on the litigation privilege. He maintains that
because the only damages awarded by the jury arose from the loss of
productivity Storix claims it incurred in repairing customer relations
following the customer email, no damages would have been awarded had the
court properly excluded the email. And without damages, the judgment
against him for breach of fiduciary duty must be reversed.
The litigation privilege in Civil Code section 47, subdivision (b) applies
to any communication (1) in a judicial proceeding or quasi-judicial
proceeding; (2) by a litigant or other participant authorized by law; (3) to
achieve the objects of the litigation; and (4) that has some connection or
logical relation to the action. (Silberg v. Anderson (1990) 50 Cal.3d 205, 211-
212 (Silberg).) The purpose of the privilege “is to afford litigants . . . the
utmost freedom of access to the courts without fear of being harassed
subsequently by derivative tort actions.” (Id. at p. 213.) Generally, whether
“a given communication is within the [litigation] privilege is an issue of law,
and not fact.” (Nguyen v. Proton Tech. Corp. (1999) 69 Cal.App.4th 140, 147;
Susan A. v. County of Sonoma (1991) 2 Cal.App.4th 88, 93.)
Johnson satisfied the first two prongs of the litigation privilege. On the
first, the privilege pertains not only to statements made during a judicial
proceeding or quasi-judicial proceeding, but also to steps taken before trial in
contemplation of litigation. (Albertson v. Raboff (1956) 46 Cal.2d 375, 381.)
19
The second is satisfied because Johnson, a party to the copyright
infringement action, sent the customer email.
However, Johnson did not meet the third or fourth prongs. On these
prongs, the moving party must establish the communication sought to
“achieve the objects of the litigation” and had “some connection or logical
relation to the action.” (Silberg, supra, 50 Cal.3d at pp. 211-212.) “[T]he
communicative act . . . must function as a necessary or useful step in the
litigation process and must serve its purposes.” (Rothman v. Jackson (1996)
49 Cal.App.4th 1134, 1146.) “The litigation privilege exists so that persons
who have been harmed or have other grievances calling for redress through
the judicial processes can and will use the courts, rather than self-help, to
obtain relief.” (Ibid.)
The object of Johnson’s copyright litigation was to stop Storix from
allegedly infringing on a copyright purportedly owned by Johnson. The
customer email was unrelated to this objective. In the email, Johnson urged
the customers to stop paying Storix, criticized the quality of the Storix
software, and questioned Storix’s financial viability, but told the customers
they could continue using the software. This discussion was not a necessary
or useful step in the copyright litigation. Johnson’s expression of his personal
views and opinions about Storix and the litigation had no functional
relationship to the litigation. Rather, these statements are the type of “self-
help” to which the litigation privilege does not apply, i.e., attempting to
persuade third parties about the merits of pending litigation before the issues
have been decided by the court.
This case is different from Blanchard v. DIRECTV, Inc. (2004) 123
Cal.App.4th 903 (Blanchard), relied upon by Johnson. In Blanchard,
“DIRECTV sent demand letters to thousands of people who purchased certain
20
devices that can pirate DIRECTV’s television programming, requesting the
recipients cease using the devices. Plaintiffs, recipients of these demand
letters, filed [a] complaint against DIRECTV, alleging that the conduct of
mailing the demand letters was an unfair business practice . . . .” (Id. at
p. 909.) The Court of Appeal concluded the litigation privilege applied and
the cease and desist letters were absolutely privileged as a communication in
serious contemplation of litigation against the customers, noting DIRECTV
did not need to sue every recipient to invoke the privilege. (Id. at p. 920.)
Blanchard is inapposite because Johnson did not send the customer
email “in contemplation of litigation” against Storix’s customers, or in any
way suggest their continued business with Storix would subject them to
potential liability for copyright infringement. To the contrary, Johnson
informed the customers they could continue using the software, but told them
to stop paying Storix for its use. Unlike in Blanchard, the customer email
was not sent to achieve the object of any current or contemplated litigation.
Johnson alternatively argues the trial court abused its discretion by
allowing Storix to discuss the customer email during closing argument as
evidence of Storix’s affirmative case against him. In support, he argues the
trial court allowed the admission of the email solely as evidence relevant to
the Individual Defendants’ defense. He suggests that based on the court’s
ruling, he was surprised when Storix “introduc[ed] the claim” during “closing
arguments,” and asserts he did not have a fair opportunity to rebut this
claim.
Even assuming Johnson did not forfeit this argument by failing to
assert an objection during closing argument, the record does not factually
support this assertion. The court never limited the admission of the email to
issues relating to the Individual Defendants’ defense, and Johnson was
21
clearly on notice that Storix intended to use the email as evidence to support
its affirmative claims.
4. Denial of Johnson’s Motions for New Trial and JNOV
Johnson moved for JNOV or for a new trial, asserting the jury’s
damage award against him was premised entirely on a communication
protected by the litigation privilege, and Storix did not have board approval
to bring the lawsuit. Johnson contends the trial court erred in denying both
motions.
As discussed in the preceding sections, the litigation privilege did not
apply to the customer email, and Storix had the capacity to bring the action.
(Ante, pts. II. A1 & A3.) Thus, the trial court properly denied both motions.9
B. Johnson’s Cross-Complaint in Fiduciary Duty Action
With respect to his cross-complaint against the Individual Defendants,
Johnson contends the court erred in granting the Individual Defendants’
anti-SLAPP motion. He also raises several challenges to the court’s jury
instructions. We address each of these contentions below.
1. Anti-SLAPP Motion
The Individual Defendants filed an anti-SLAPP motion to strike
Johnson’s cross-complaint, arguing his allegations constituted protected
activity under the statute. The trial court declined to strike the entire cross-
complaint or an entire cause of action, but issued a minute order granting the
motion in part as to certain language in the cross-complaint. The Individual
Defendants then answered the cross-complaint.
9 We have jurisdiction to consider Johnson’s challenges to the
postjudgment orders because these orders may be reviewed on appeal from
the underlying judgment. (Code Civ. Proc., § 906.) In his Notice of Appeal,
Johnson indicated he was appealing from these orders.
22
Johnson contends the trial court erred in striking the specified
allegations from his cross-complaint. He also argues the trial court
improperly awarded the Individual Defendants their attorney fees and costs
as prevailing parties. The Individual Defendants counter that the trial court
properly granted the motion.
After noting that Johnson did not appeal from the order granting the
motion to strike or the related fees and costs order, we requested
supplemental briefing on the timeliness of Johnson’s appeal from these
orders. Having reviewed these submissions, we conclude this portion of
Johnson’s appeal is untimely.
“ ‘Compliance with the requirements for filing a notice of appeal is
mandatory and jurisdictional,’ and an appellate court therefore must dismiss
an appeal that is untimely.” (Starpoint Properties, LLC v. Namvar (2011)
201 Cal.App.4th 1101, 1107.) Subject to certain exceptions not relevant here,
an order granting or denying a special motion to strike a SLAPP cause of
action is appealable. (Code Civ. Proc., §§ 425.16, subd. (i), 904.1, subd.
(a)(13); Reyes v. Kruger (2020) 55 Cal.App.5th 58, 67 [grant]; Kyle v. Carmon
(1999) 71 Cal.App.4th 901, 906 [same]; People ex rel. Lockyer v. Brar (2004)
115 Cal.App.4th 1315, 1317 [denial].) An appeal also lies if the trial court
denies the motion as to some causes of action, for example where the
complaint contains claims arising from both protected and unprotected
activity. (Baral v. Schnitt (2016) 1 Cal.5th 376, 381-382, 394; Old Republic
Construction Program Group v. The Boccardo Law Firm, Inc. (2014) 230
Cal.App.4th 859, 866, fn. 4.) Additionally, an attorney fees and costs award
to a prevailing defendant on an anti-SLAPP motion is directly appealable.
(City of Colton v. Singletary (2012) 206 Cal.App.4th 751, 782.)
23
California Rules of Court, rule 8.104(a) specifies the deadline for filing
a notice of appeal: the earlier of 60 days after service of notice of entry of
judgment or 180 days after entry of judgment. These deadlines also apply to
appealable orders. (Cal. Rules of Court, rule 8.104(e).)
The trial court issued a minute order on March 6, 2017, granting the
anti-SLAPP motion in part. The court clerk served the parties with notice of
entry of order that same day. Therefore, Johnson had 60 days, or until May
5, 2017, to appeal that order. Johnson filed his notice of appeal on December
10, 2018. Accordingly, Johnson’s appeal from the order is untimely and we
lack jurisdiction to review it.
After granting the anti-SLAPP motion, the trial court issued an order
on May 12, 2017, awarding the Individual Defendants’ attorney fees and
costs on the motion. Neither the clerk nor any party served notice of entry of
this order. Accordingly, Johnson had 180 days, or until November 8, 2017, to
appeal from this order. Johnson did not file a notice of appeal before this
date. His appeal from this order is also untimely and we lack jurisdiction to
review it.10
2. Claimed Instructional Errors
Johnson contends the trial court erred in instructing the jury on his
affirmative claims by: (1) giving an at-will employment instruction; (2) giving
a waiver instruction; (3) refusing to instruct on majority shareholders duties
10 In his supplemental brief, Johnson said he did not file a notice of
appeal in order to avoid piecemeal litigation. Although we understand
Johnson’s objective, his concern is misplaced. Had he timely appealed from
the orders, the appeal would have automatically stayed all further trial court
proceedings on the merits upon the causes of action affected by the motion.
(Newport Harbor Ventures, LLC v. Morris Cerullo World Evangelism (2018) 4
Cal.5th 637, 654-655.)
24
specific to Johnson’s claims; and (4) refusing his business judgment rule
instruction and giving a misleading instruction on this subject.
a. General Legal Principles
A party is entitled to instructions on his or her theory of the case. (Sills
v. Los Angeles Transit Lines (1953) 40 Cal.2d 630, 633.) The trial court’s duty
“is fully discharged if the instructions given by the court embrace all the
points of the law arising in the case.” (Hyatt v. Sierra Boat Co. (1978) 79
Cal.App.3d 325, 335.)
“A judgment may not be reversed on appeal, even for error involving
‘misdirection of the jury,’ unless ‘after an examination of the entire cause,
including the evidence,’ it appears the error caused a ‘miscarriage of justice.’
(Cal. Const., art. VI, § 13.)” (Soule v. General Motors Corp. (1994) 8 Cal.4th
548, 574 (Soule).) “Instructional error in a civil case is prejudicial ‘where it
seems probable’ that the error ‘prejudicially affected the verdict.’ ” (Id. at
p. 580.) “Actual prejudice must be assessed in the context of the individual
trial record.” (Ibid.)
b. At-Will Employment and Waiver Instructions
i. Background
Johnson’s cross-complaint alleged he was entitled to a position at Storix
and the Individual Defendants breached a fiduciary duty owed to him by
denying him a position.
At trial, Johnson testified the Individual Defendants breached a
fiduciary duty owed to him by “oust[ing him] from the company as an
employee” and said he had “a reasonable entitlement to a position at the
company.” In support, he called an expert who opined on the value of his lost
salary and benefits.
25
Board president and CEO Huffman testified he “had the power to
terminate at will” and “the power to decide whether or not [Johnson] could
come back or not[.]” Huffman claimed Johnson never contacted him about
wanting to come back to work at Storix, and that Johnson told Altamirano he
would come back only if Huffman left the company and if Johnson had control
over the software.
At the Individual Defendants’ request, the trial court instructed the
jury regarding at-will employment as follows: “In California, employment is
presumed to be ‘at will.’ That means that an employer may discharge an
employee for no reason, or for a good, bad, mistaken, unwise, or even unfair
reason, as long as its action is not for a discriminatory reason.”
The court also instructed regarding the Individual Defendants’ waiver
affirmative defense as follows:
“[Defendants] claim that they did not have to rehire
[Johnson] because [he] gave up his right to have future
employment. This is called a ‘waiver.’
“To succeed, . . . Defendants must prove both of the
following by clear and convincing evidence: [¶] “1. That . . .
Johnson knew . . . Defendants were required to rehire him;
and [¶] “2. That . . . Johnson freely and knowingly gave up
his right to have . . . Defendants do so.
“A waiver may be oral or written or may arise from conduct
that shows . . . Johnson gave up that right. [¶] “If . . .
Defendants prove that . . . Johnson gave up his right to
continued employment, then . . . Defendants were not
required to rehire him.”
ii. Analysis
Johnson contends the trial court erred by giving the at-will
employment instruction because it was “irrelevant and misleading.” He
argues he did not assert a wrongful termination claim and the instruction
26
was not relevant to his claim that the Individual Defendants breached a
fiduciary duty by refusing him a position at Storix.
We note initially the record does not show Johnson objected to this
instruction at trial. Before jury instructions, counsel and the court met off
the record to review the jury instructions and verdict form. The next day, the
court allowed counsel to set forth their arguments on the record. During this
discussion, Johnson’s counsel did not assert any challenge to the at-will
employment instruction.
Even assuming Johnson preserved the issue without an objection (see
Lund v. San Joaquin Valley Railroad (2003) 31 Cal.4th 1, 7), the court did
not err in giving the at-will instruction. The instruction was a correct
statement of the law, and was relevant to Johnson’s testimony that the
Individual Defendants breached a fiduciary duty by ousting him or refusing
him a position at Storix. Johnson alleged he had a reasonable expectation to
a position at the company and that the Individual Defendants breached their
fiduciary duty to him by refusing to permit him to work at the company.
During trial, both sides argued regarding this theory of recovery.
In any event, any error in giving the instruction was harmless.
(Guernsey v. City of Salinas (2018) 30 Cal.App.5th 269, 282.) Generally,
giving an irrelevant or inapplicable instruction is only a technical error that
does not constitute ground for reversal. (Smith v. Sugich Co. (1960) 179
Cal.App.2d 299, 311; see People v. Cross (2008) 45 Cal.4th 58, 67.) This is
because we are required to assume the jury disregarded factually
inapplicable instructions. The court specifically told the jury: “After you
have decided what the facts are, you may find that some instructions do not
apply. In that case, follow the instructions that do apply and use them
together with the facts to reach your verdict.” (See CACI No. 5000.)
27
The record does not support an exception to this rule. Johnson’s theory
at trial was that he had a right to employment because of his status as a
shareholder and director, not because he had some contractual right to
employment. The at-will instruction did not preclude him from arguing that
he was not an at-will employee and/or even if he was an at-will employee, the
Individual Defendants breached their fiduciary duties owed to a minority
shareholder by ousting him and/or not rehiring him. On this record, there is
no reasonable probability the instruction prejudicially affected the verdict.
As to the related waiver instruction (set forth above), Johnson contends
the instruction was not factually supported. However, the Individual
Defendants specifically alleged waiver as an affirmative defense, and at trial
asserted this defense based on Johnson’s testimony he resigned his
employment at Storix. To the extent Johnson contends his right to future
employment could not be waived, Johnson cites no authority to support this
argument and we treat it as forfeited. (See Horowitz v. Noble (1978) 79
Cal.App.3d 120, 139.)
c. Majority Shareholder Duty Instruction
i. Background
Johnson proposed a modified version of CACI “4100 ‘Fiduciary Duty’
Explained (Modified)” (the proposed instruction)11 which read:
“Majority shareholders, either singly or acting in concert to
accomplish a joint purpose owe what is known as a
fiduciary duty to the minority and to the corporation to use
their ability to control the corporation in a fair, just, and
equitable manner. A fiduciary duty imposes on majority
shareholders a duty to act with the utmost good faith in the
11 The proposed instruction was omitted from the clerk’s transcript;
however, we granted Johnson’s unopposed request to augment the record,
which includes the proposed instruction.
28
best interests of the corporation and the minority
shareholders.
“Majority shareholders may not use their power to control
corporate activities to benefit themselves alone or in a
manner detrimental to the minority. Any use to which they
put the corporation or their power to control the
corporation must benefit all shareholders proportionately
and must not conflict with the proper conduct of the
corporation’s business.
“When a minority shareholder holds a reasonable
expectation of employment with the corporation, majority
shareholders may breach their fiduciary duties by denying
the minority shareholder a position with the company.”
(Italics added.)
The trial court ultimately instructed with CACI No. 4100 (“ ‘Fiduciary
Duty’ Explained”), describing the phrase “fiduciary duty” as follows: “A
corporate director owes what is known as a fiduciary duty to his/her
corporation and the corporation’s shareholders. A fiduciary duty imposes on
a corporate director a duty to act with the utmost good faith in the best
interests of his/her corporation and the corporation’s shareholders.”
Immediately thereafter, the court gave a special instruction entitled
“Majority Shareholder Fiduciary Duties,” which included the first two
paragraphs of the proposed instruction, but omitted the italicized
paragraph12 regarding a minority shareholder’s reasonable expectation of
employment.
ii. Analysis
Johnson argues that omitting the disputed paragraph rendered the
instruction meaningless to his claim for continued employment. Johnson
admits he withdrew the proposed instruction, but claims he did so only after
12 We refer to the italicized language as the “disputed paragraph.”
29
the court indicated it would be combined with another instruction to create a
new instruction. The new instruction did not include the disputed
paragraph.
The Individual Defendants respond that Johnson waived his objection
and cannot assert it on appeal because he withdrew the instruction
containing the disputed paragraph and his counsel presented the special
instruction “Majority Shareholder Fiduciary Duties” which all counsel
accepted and the trial court used. Even if Johnson did not waive this
argument, the Individual Defendants assert that the disputed paragraph
proposed by Johnson, and the non-binding authority he cited in support of the
disputed paragraph, do not support his argument that he was entitled to
continued employment as a 40 percent shareholder. We conclude that
Johnson forfeited this argument. But even if not forfeited, we would find that
it fails on the merits.
After the close of evidence, the court held an off-the-record discussion
with counsel regarding jury instructions, noting that counsel would be
allowed to make a record the following morning. The following day, counsel
for the Individual Defendants noted that Johnson’s counsel sent a “revised
shareholder fiduciary duty instruction.” The following discussion then took
place:
“[INDIVIDUAL DEFENDANTS’ COUNSEL]: -- [W]e have
no issues with it. It’s an issue now of location in the jury
instructions, and I would suggest that it replace 4100 and
the modified 4100 that we talked about yesterday.
“THE COURT: In other words, following 4100?
“[INDIVIDUAL DEFENDANTS’ COUNSEL]: Instead of
4100, Your Honor.
“THE COURT: In other words, not give CACI 4100?
30
“[INDIVIDUAL DEFENDANTS’ COUNSEL]: No. I think
we were going to do that yesterday. It was -- no. It was
right after 4100, CACI. That’s right. I’m sorry.
“THE COURT: But the language as modified by [plaintiff’s
counsel] is agreeable?
“[INDIVIDUAL DEFENDANTS’ COUNSEL]: Yes, Your
Honor, so it comes right after 4100.
“THE COURT: And, [Storix’s counsel], agreeable?
“[STORIX COUNSEL]: That’s fine, Your Honor.
“THE COURT: And thank you, [Johnson’s counsel], for
doing that. I’ll give it right after 4100.”
Johnson’s counsel raised no objection on the record regarding removal
of the disputed paragraph. The minute order for this date does not state
what transpired during the off-the-record discussion. The court subsequently
instructed with CACI No. 4100 and then gave the instruction proposed by
Johnson’s counsel entitled “Majority Shareholder Fiduciary Duties,” which
included the first two paragraphs set forth above, but omitted the disputed
paragraph regarding a minority shareholder’s reasonable expectation of
employment.
The record shows that the court never ruled on the controversy
surrounding the disputed paragraph. Rather, the record suggests that
Johnson withdrew the proposed instruction containing the disputed
paragraph, presented an instruction without the disputed paragraph, and all
counsel agreed to the instruction ultimately given. “A party who has agreed
at the trial that an instruction proposed by him shall be deemed withdrawn
cannot contend on appeal that the instruction should have been given.”
(Swails v. General Elec. Co. (1968) 264 Cal.App.2d 82, 85.) Accordingly,
31
Johnson forfeited the asserted error regarding omission of the italicized
language.
Even if the issue was not forfeited, Johnson has not demonstrated any
prejudicial error in the failure to instruct the jury with the disputed
paragraph.
Johnson cited no authority in his opening brief to support giving the
disputed paragraph. In his reply brief, Johnson cited out-of-state authority
to support instructing with the disputed paragraph. Out-of-state authority is
not binding on California courts. (Doe v. Occidental College (2019) 37
Cal.App.5th 1003, 1018, fn. 2.) Additionally, the cases cited by Johnson
during his rebuttal oral argument (Neider v. Dardi (1955) 130 Cal.App.2d 646and Brown v. Allied Corrugated Box Co. (1979) 91 Cal.App.3d 477) do not
assist him because these cases do not relate to this issue. In any event, we
are not convinced that removal of the disputed paragraph prejudiced
Johnson.
“Instructional error in a civil case is prejudicial ‘where it seems
probable’ that the error ‘prejudicially affected the verdict.’ [Citations.] Of
course, that determination depends heavily on the particular nature of the
error, including its natural and probable effect on a party’s ability to place his
full case before the jury.” (Soule, supra, 8 Cal.4th at p. 580.) When deciding
whether an error of instructional omission was prejudicial, actual prejudice
must be assessed in the context of the individual trial record, including
“(1) the state of the evidence, (2) the effect of other instructions, (3) the effect
of counsel’s arguments, and (4) any indications by the jury itself that it was
misled.” (Id. at pp. 580-581.)
Johnson’s briefs attempt no such analysis. Moreover, our independent
review of the record shows that the parties fully litigated Johnson’s right to
32
continued employment. The jury heard evidence that Johnson resigned his
employment, that Huffman and Turner were disappointed with this decision,
and both tried to convince Johnson to change his mind. Johnson’s last day at
Storix was May 22, 2014. A month after he left, Johnson noted that Storix
hired someone new. He testified at that point, “this kind of confirmed that
they had no intention of keeping me there.”
Johnson then reached out to Altamirano to help him “open a dialogue
with the other [director] defendants in order to try to resolve our differences
and find a way to work together again.” Altamirano spoke to the other
Individual Defendants and communicated to Johnson that they did not want
him back. After Johnson threatened copyright litigation as leverage, the
Individual Defendants asked him to document his conditions for returning to
Storix.
Johnson responded with an email to Altamirano dated July 16, 2014,
stating that, among other things, Huffman and Turner needed to
immediately resign from the board for him to return to Storix. Johnson
claimed this was the first time he placed conditions on his return. The
Individual Defendants, as a group, decided that Johnson’s return “wasn’t the
best for the company” and that “the conditions that came along with him
returning were not acceptable.”
The “Majority Shareholder Fiduciary Duties” instruction accurately
informed the jury of the concept that majority shareholders owe a fiduciary
duty to minority shareholders. During closing argument, Johnson’s counsel
informed the jury that the Individual Defendants’ “betrayal” occurred when
they initially refused his request to return. The Individual Defendants’
counsel interpreted the evidence differently, arguing to the jury that no
betrayal occurred.
33
Thus, the parties tendered to the jury the issue whether the Individual
Defendants breached a fiduciary duty to Johnson by denying him
employment after his resignation. On this record, it is unlikely the jury
would have found that, after his resignation, Johnson reasonably expected
future employment with Storix, or that the Individual Defendants breached a
fiduciary duty to Johnson when they decided that Johnson’s return was not
in the corporation’s best interest. Significantly, in deciding whether to bring
Johnson back, the Individual Defendants, as majority shareholders, had an
obligation to be fair to Johnson, but were also required to act in the best
interest of the corporation. (Jones, supra, 1 Cal.3d at p. 108 [majority
shareholders “have a fiduciary responsibility to the minority and to the
corporation to use their ability to control the corporation in a fair, just, and
equitable manner.”].)
Accordingly, Johnson has not met his burden to show the failure to
instruct with the disputed paragraph prejudiced him. (Cal. Const., art. VI, §
13 [“No judgment shall be set aside, . . . on the ground of misdirection of the
jury, . . . unless, after an examination of the entire cause, including the
evidence, the court shall be of the opinion that the error complained of has
resulted in a miscarriage of justice.”].)
d. Business Judgment Instruction
Except for the bracketed language noted below, the trial court
instructed the jury on the business judgment rule as follows: “The business
judgment rule is a presumption that in making a business decision [in their
capacity as directors] the directors of a corporation acted on an informed
basis, in good faith, and in the honest belief that the action taken was in the
best interests of the company.” Over Johnson’s objection, the court refused
his request to include the bracketed language, finding it was “redundant
34
because [the instruction is] clearly talking about the directors of the
corporation. . . .”
“The business judgment rule is premised on the notion that
management of the corporation is best left to those to whom it has been
entrusted, not to the courts. [Citation.] The rule requires judicial deference
to the business judgment of corporate directors so long as there is no fraud or
breach of trust, and no conflict of interest exists. [Citations.] The rule has
been codified in section 309, which requires a director to perform ‘in good
faith, in a manner such director believes to be in the best interests of the
corporation and its shareholders and with such care, including reasonable
inquiry, as an ordinarily prudent person in a like position would use under
similar circumstances.’ ” (Desaigoudar v. Meyercord (2003) 108 Cal.App.4th
173, 183, footnotes omitted.)
Although not entirely clear, Johnson appears to contend the deletion of
the bracketed language from the instruction made it misleading. We
disagree. As the trial court noted, the instruction properly informed jurors
the business judgment rule pertained to the decisions of corporate directors.
Adding the phrase “in their capacity as directors” was redundant. (Mathis v.
Morrissey (1992) 11 Cal.App.4th 332, 343 [“reversal of a judgment may not be
based upon the failure to give particular instructions if the point is covered
adequately by instructions which were given”].)
To the extent Johnson contends the court erred in not allowing him to
testify as an expert on corporate governance issues, we disagree. The
Individual Defendants moved in limine for an order precluding Johnson from
testifying as an expert witness on corporate governance issues because he
failed to qualify as an expert on these issues. The trial court granted the
motion after Johnson’s counsel stated he did not oppose it. Accordingly,
35
Johnson forfeited his right to challenge the court’s ruling on appeal.
(Mangano v. Verity, Inc. (2009) 179 Cal.App.4th 217, 221.)13
III. Shareholder’s Derivative Action
Johnson contends the court erred in denying his motion to release his
shareholder plaintiff’s bond. We determine there was no error.
A. Background
After Johnson and Sassi filed the derivative action on Storix’s behalf,
the Individual Defendants moved under section 800 for an order requiring
the derivative plaintiffs to post a $50,000 bond to represent Storix. The
Individual Defendants asserted there was no reasonable probability that
prosecuting the derivative complaint would benefit Storix or its shareholders.
Johnson then voluntarily posted the bond and defendants withdrew their
motion. Johnson was the only principal on the bond.
The Individual Defendants then moved to dismiss the derivative action
on the ground Johnson and Sassi could not fairly and adequately represent
Storix’s interests. The court deferred the decision until trial. At the
conclusion of the jury trial in the fiduciary duty action, the court determined
that as a result of the adverse verdict against Johnson, he could not properly
represent Storix’s interest, but allowed the bench trial on the derivative
action to proceed with Sassi as the plaintiff. Ultimately the court found in
favor of the Individual Defendants on all causes of action in the derivative
action.
13 Johnson contends the court’s combined instructional errors were highly
prejudicial to his cross-claims. Because we have either concluded no
instructional error occurred, or the asserted error was waived, we reject
Johnson’s cumulative-error claim.
36
After the trial court issued its consolidated judgment, Johnson moved
to release his shareholder-plaintiff’s bond. He claimed the bond should be
released to him because the trial court found he had no standing to represent
Storix, and therefore he was never a plaintiff and the bond’s purpose was
abandoned.
In October 2018, Storix and the Individual Defendants filed their cost
bills. In response, Johnson moved to strike or tax the claimed costs. The
court denied the motion to release the shareholder plaintiff’s bond on
November 16, 2018. Within days, the Individual Defendants moved for an
award of attorney fees under section 800 as the prevailing parties in the
derivative action.
B. Shareholder Bond
Section 800 states “the terms and conditions under which a shareholder
derivative action may be maintained.” (West Hill Farms, Inc. v. RCO Ag
Credit, Inc. (2009) 170 Cal.App.4th 710, 715.) “[T]he essential purpose of
the . . . bond statute is to create a deterrent to unwarranted shareholder
derivative lawsuits by providing a mechanism for securing a prevailing
defendant’s expenses up to $50,000.” (Donner Management Co. v. Schaffer
(2006) 142 Cal.App.4th 1296, 1308 (Donner).) Accordingly, a defendant in a
shareholder derivative action may move the court for an order requiring the
plaintiff to post a bond not to exceed $50,000, to secure payment of the
defendant’s attorney fees. (§ 800, subds. (c) & (d).) If the derivative plaintiff
obtains no recovery for the corporation, the corporation may recover its
litigation expenses from the security, including corporate payments under
section 317 to indemnify officers and directors named in the action. (§ 800,
subd. (d); Brusso v. Running Springs Country Club, Inc. (1991) 228
Cal.App.3d 92, 103.) “If the corporate agent accused of wrongdoing wins a
37
judgment on the merits in defense of the action, indemnification is
mandatory.” (Groth Bros. Oldsmobile, Inc. v. Gallagher (2002) 97
Cal.App.4th 60, 73.)
Johnson challenges the order denying the release of his shareholder-
plaintiff’s bond, claiming the bond’s purpose was abandoned before any
liability had been incurred (Code. Civ. Proc., § 995.430, subd. (b)), and the
bond was no longer in force and effect (Code. Civ. Proc., § 995.360, subd. (b)).
He appears to argue that both conditions were satisfied when the trial court
found he lacked standing to pursue the shareholder derivative suit leaving
Sassi, who was not a principal on the bond, as the only shareholder-plaintiff
to prosecute the action.
The court’s determination that Johnson lacked standing to bring the
derivative suit did not insulate him from a subsequent attorney fees award
under section 800. (See Martin v. Bridgeport Community Assn., Inc. (2009)
173 Cal.App.4th 1024, 1038-1039 [“[M]andatory attorney’s fees and costs
award under [Civil Code] section 1354, subdivision (c), applies when a
plaintiff brings an action to enforce such governing documents, but is
unsuccessful because he or she does not have standing to do so.”]; Real
Property Services Corp. v. City of Pasadena (1994) 25 Cal.App.4th 375, 384,
fn. 7 [“[A]ny lack of standing by [plaintiff] to bring the lawsuit does not alter
the fact that [plaintiff] sued [defendant] to enforce the contract, thereby
entitling the prevailing party to its attorney’s fees.”].)
The purpose of the bond is to “[deter] unwarranted shareholder
derivative lawsuits by providing a mechanism for securing a prevailing
defendant’s expenses up to $50,000.” (Donner, supra, 142 Cal.App.4th at
p. 1308.) Although the trial court found Johnson lacked standing to
prosecute the derivative action on Storix’s behalf, Johnson had an active role
38
in pursuing the derivative action as a plaintiff for four years. On this record,
denying Johnson’s motion and releasing the bond to Storix accomplished the
purpose of the bond statute.
Johnson’s reliance on Code of Civil Procedure section 995.430,
subdivision (b) is misplaced. That code section provides a bond remains in
force and effect until “[t]he purpose is abandoned without any liability having
been incurred.” (Ibid.) Johnson has not shown he abandoned the purpose of
the bond, such as dismissing the derivative action. Rather, the derivative
action went to trial on the merits, after which Johnson incurred liability on
the bond.
We similarly find unhelpful Johnson’s reliance on Code of Civil
Procedure section 995.360, subdivision (b). That code section states a bond
given in an action may be withdrawn from the file and returned to the
principal “on order of the court” if “[t]he bond is no longer in force and effect
and the time during which the liability on the bond may be enforced has
expired.” (Ibid.) Johnson has not cited to anything in the record showing he
sought a court order to withdraw the bond from the file and return it to him.
IV. Fees and Costs Award in Fiduciary Duty and Derivative Actions
After the court denied Johnson’s motion to release the bond to him,
Storix moved for fees, and Storix and the Individual Defendants later moved
for costs. Over Johnson’s opposition, the court entered an order awarding
$50,000 in attorney fees to Storix, and $24,493.53 in costs to Storix and
$55,712.76 in costs to the Individual Defendants.
On appeal, Johnson raises numerous challenges to the court’s fee/cost
order, including that the Individual Defendants were not the prevailing
parties and incurred no expenses in the derivative suit; Storix is not entitled
39
to costs or fees after unlawfully defending its own claims; and the trial judge
displayed judicial bias in ordering him to pay costs.
We have no jurisdiction to review these contentions because Johnson
failed to appeal from the postjudgment cost and attorney fees awards.
The trial court entered the judgment in the Storix action on September
12, 2018. The judgment was silent as to attorney fees and costs. Johnson
filed his notice of appeal in December 2018. Thereafter, in January 2019, the
trial court awarded the Individual Defendants their attorney fees in the
derivative action, and in August 2019, the court issued its ruling on
Johnson’s motion to tax or strike costs. Johnson did not appeal from these
postjudgment orders.
A postjudgment order awarding or denying costs or attorney fees is
separately appealable under Code of Civil Procedure section 904.1,
subdivision (a)(2). (Norman I. Krug Real Estate Investments, Inc. v. Praszker
(1990) 220 Cal.App.3d 35, 46 [costs]; Apex LLC v. Korusfood.com (2013) 222
Cal.App.4th 1010, 1015 [attorney fees].) Because Johnson failed to appeal
from the orders awarding costs and attorney fees we have no jurisdiction to
review them. (Hollister Convalescent Hosp., Inc. v. Rico (1975) 15 Cal.3d 660,
666-667.)
We similarly have no jurisdiction to address Johnson’s contention that
the trial judge displayed judicial bias in ordering him to pay costs. However,
based on the inherent seriousness of this assertion and our extensive review
of the record, we note that we have found Johnson’s bias claim to be without
merit as it is based solely on the court’s adverse rulings concerning attorney
fees and costs. As aptly noted in Moulton Niguel Water Dist. v. Colombo
(2003) 111 Cal.App.4th 1210, 1219, “When making a ruling, a judge
interprets the evidence, weighs credibility, and makes findings. In doing so,
40
the judge necessarily makes and expresses determinations in favor of and
against parties. . . . We will not hold that every statement a judge makes to
explain his or her reasons for ruling against a party constitutes evidence of
judicial bias.”
V. Malicious Prosecution Action
A. Background
After the jury verdict against Johnson in the fiduciary duty action and
the court’s decision in the derivative action, the trial court entered a
consolidated judgment in favor of (1) Storix on its complaint in the fiduciary
duty action; (2) the Individual Defendants on Johnson’s cross-complaint; and
(3) the Individual Defendants in the derivative action. Undeterred, Johnson
filed a separate action against the Individual Defendants (except for
Smiljkovich) for malicious prosecution, breach of fiduciary duty, conversion,
economic interference, fraud/constructive fraud, and civil conspiracy.
Johnson’s malicious prosecution claim alleged these defendants
directed Storix’s counsel to file the fiduciary duty complaint against him
without probable cause and without board approval and the action
terminated on the merits in Johnson’s favor. He asserted the Individual
Defendants personally authorized the complaint to be filed, knew the claims
were false, and could have ended the litigation. Johnson claimed he was
harmed by having to defend against Storix’s lawsuit.
The defendants countered by filing an anti-SLAPP motion challenging
Johnson’s claims. Johnson responded by voluntarily dismissing the action
without prejudice.
The defendants then filed a costs memorandum and a motion for
attorney fees seeking fees permitted by the anti-SLAPP statute. Judge Bacal
awarded defendants $2,364.45 in costs and attorney fees of $12,237.50.
41
Johnson contends the court erred in finding he did not show a
probability of success on his malicious prosecution claim. He alternatively
argues we should reverse the fees and cost awards because defendants
incurred no attorney fees or costs and/or the amounts awarded were
excessive.
B. Legal Principles
A special motion to strike allows a defendant to gain early dismissal of
a lawsuit that qualifies as a SLAPP. (Code Civ. Proc., § 425.16, subd. (a).) In
ruling on this motion, the trial court must first decide whether the moving
defendant has established the plaintiff’s suit is subject to the anti-SLAPP
statute. (Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53,
67.) If the defendant meets this burden, the burden shifts to the plaintiff to
demonstrate a probability of prevailing on the claim. (Ibid.)
“[A] prevailing defendant on a special motion to strike shall be entitled
to recover his or her attorney’s fees and costs.” (Code Civ. Proc., § 425.16,
subd. (c)(1).) When a plaintiff voluntarily dismisses the action after an anti-
SLAPP motion has been filed but before the court rules on the merits of the
motion, the trial court retains jurisdiction to award attorney fees. (Law
Offices of Andrew L. Ellis v. Yang (2009) 178 Cal.App.4th 869, 878-879.)
In this situation, a majority of the Courts of Appeal require that the
trial court determine the merits of the anti-SLAPP motion notwithstanding
the prior dismissal of the underlying suit. If the motion would have been
granted absent the dismissal of the complaint, then the court is required to
award attorney fees and costs incurred in preparing the motion to strike.
(See Tourgeman v. Nelson and Kennard (2014) 222 Cal.App.4th 1447, 1457;
Pfeiffer Venice Properties v. Bernard (2002) 101 Cal.App.4th 211, 218; Liu v.
Moore (1999) 69 Cal.App.4th 745, 752; compare, Coltrain v. Shewalter (1998)
42
66 Cal.App.4th 94, 107 [suggesting a court may award attorney fees and costs
without first determining whether defendant would have prevailed on the
anti-SLAPP motion].) Accordingly, we review the merits of the anti-SLAPP
motion. We disregard Johnson’s reasons why he dismissed the complaint as
irrelevant to the analysis.
C. Merits Analysis
“ ‘To establish a cause of action for the malicious prosecution of a civil
proceeding, a plaintiff must plead and prove that the prior action (1) was
commenced by or at the direction of the defendant and was pursued to a legal
termination in his, plaintiff’s, favor [citations]; (2) was brought without
probable cause [citations]; and (3) was initiated with malice.’ ” (Lanz v.
Goldstone (2015) 243 Cal.App.4th 441, 458.) To determine whether there was
a favorable termination we review the judgment in the prior action. (Casa
Herrera, Inc. v. Beydoun (2004) 32 Cal.4th 336, 341-342.)
We examine the “ ‘ “judgment as a whole” ’ ” when determining whether
favorable termination exists. (Staffpro, Inc. v. Elite Show Servs., Inc. (2006)
136 Cal.App.4th 1392, 1403 (Staffpro).) Under this rule, it is not sufficient
that some of the claims in the prior action terminated in favor of the
malicious prosecution plaintiff; rather, for a malicious prosecution claim to lie
“there must first be a favorable termination of the entire action.” (Crowley v.
Katleman (1994) 8 Cal.4th 666, 686; Lane v. Bell (2018) 20 Cal.App.5th 61, 72
(Lane).)
Johnson concedes his malicious prosecution claim arose out of protected
activity, but maintains he has established a probability of prevailing on his
claim. He argues that because the jury rejected Storix’s $1.2 million “unfair
head start” claim and awarded Storix only $3,739.14 for lost employee
productivity on their breach of fiduciary duty cause of action, we should sever
43
the employee-productivity claim from the unrelated “unfair head start” claim
and declare he prevailed.
The argument is unavailing because Storix’s breach of fiduciary duty
claim is not severable. The fact Storix’s claim for unfair head-start damages
terminated in Johnson’s favor is insufficient to establish Johnson prevailed
against Storix. (Staffpro, supra, 136 Cal.App.4th at p. 1405 [“[S]everability
analysis is improper in determining whether a malicious prosecution plaintiff
has demonstrated favorable termination of an underlying lawsuit.”].)
Because the entire Storix action was not terminated in Johnson’s favor,
he cannot establish the essential element of favorable termination and his
malicious prosecution claim fails. (Lane, supra, 20 Cal.App.5th at pp. 66, 76
[malicious prosecution plaintiffs could not establish the essential element of
favorable termination because the entire underlying action was not
terminated in their favor].) Thus, the trial court properly awarded
defendants their reasonable attorney fees and costs in bringing the anti-
SLAPP motion. (Code Civ. Proc., § 425.16, subd. (c)(1).)
D. Additional Contentions
Johnson alternatively claims the trial court erred in awarding the
attorney fees and costs because these defendants incurred no expenses, citing
evidence that Storix indemnified them and advanced their legal expenses.
Johnson cites no authority to support this contention, and numerous courts
have rejected the argument that a prevailing party is entitled to an attorney
fees award only if the party actually paid or became liable to pay the fees.
(See International Billing Services, Inc. v. Emigh (2000) 84 Cal.App.4th 1175,
1192-1193; see also Lolley v. Campbell (2002) 28 Cal.4th 367, 373 [employee
represented without charge by Labor Commissioner entitled to award of
attorney fees as prevailing party]; Ketchum v. Moses (2001) 24 Cal.4th 1122,
44
1141-1142 [party represented on a contingency basis recovered fees under
Code Civ. Proc., § 425.16, subd. (c)]; In re Marriage of Ward (1992) 3
Cal.App.4th 618, 623-626 [attorney fees may be awarded to legal services
organizations who represent clients pro bono]; Staples v. Hoefke (1987) 189
Cal.App.3d 1397, 1410 [“Plaintiffs were not entitled to avoid their contractual
obligation to pay reasonable attorney fees based on the fortuitous
circumstance that they sued a defendant who obtained insurance coverage
providing a defense.”].)
Johnson also asserts the attorney fees award amount was unreasonable
given Storix’s limited success. “The amount of an attorney fee award under
the anti-SLAPP statute is computed by the trial court in accordance with the
familiar ‘lodestar’ method. [Citation.] Under that method, the court
‘tabulates the attorney fee touchstone, or lodestar, by multiplying the number
of hours reasonably expended by the reasonable hourly rate prevailing in the
community for similar work.’ ” (Cabral v. Martins (2009) 177 Cal.App.4th
471, 491.) The attorney fee award should ordinarily include compensation for
all hours reasonably spent on the anti-SLAPP and fees motions. (Christian
Research Institute v. Alnor (2008) 165 Cal.App.4th 1315, 1321.) The
prevailing defendant has the burden of establishing his or her entitlement to
fees, including the reasonable amount of those fees, by documenting the
hours expended and hourly rates. (Id. at p. 1320.)
“A trial court’s exercise of discretion concerning an award of attorney
fees will not be reversed unless there is a manifest abuse of discretion.
[Citation.] ‘ “The ‘experienced trial judge is the best judge of the value of
professional services rendered in his court, and while [this] judgment is of
course subject to review, it will not be disturbed unless the appellate court is
45
convinced that it is clearly wrong[’] — meaning that it abused its
discretion.” ’ ” (Nichols v. City of Taft (2007) 155 Cal.App.4th 1233, 1239.)
The trial court concluded these defendants demonstrated a probability
of prevailing on the first cause of action against them for malicious
prosecution. The trial court properly employed the lodestar method in
determining an appropriate attorney fees award. These defendants lodged
attorney invoices and the declaration of the attorney who handled the motion.
This declaration established the hours worked and the billing rates for the
attorneys and paralegals. The invoices described the legal services provided
in sufficient detail and indicated who performed the tasks. Significantly,
Johnson did not challenge the itemized billings with evidence that the
claimed attorney fees were inappropriate, nor did he submit a declaration of
an attorney with relevant expertise to demonstrate the fees and billing rates
were unreasonable.
Defendants requested $15,625 in attorney fees. Based on their partial
success on the motion and the court’s finding that some of the requested fees
pertained to unrelated issues, the trial court awarded $9,027.50 for time
spent on the anti-SLAPP motion. The court awarded an additional $3,210 for
preparing the attorney fees motion. Johnson has not identified any valid
grounds for overturning the trial court’s exercise of discretion. Accordingly,
we cannot conclude the amount of attorney fees awarded was unreasonable.
Under Code of Civil Procedure section 425.16, subdivision (c), the
malicious prosecution defendants are also entitled to recover their costs and
attorney fees on appeal as to this anti-SLAPP issue. (Dove Audio, Inc. v.
Rosenfeld, Meyer & Susman (1996) 47 Cal.App.4th 777, 785.)
46
DISPOSITION
The judgment in San Diego County Superior Court Case No. 37-2015-
00034545-CU-BC-CTL is affirmed.
The order in San Diego County Superior Court Case No. 37-2019-
00002457-CU-BT-CTL is affirmed and the case is remanded to the trial court
with directions to conduct further proceedings as are appropriate with
respect to an award of attorney fees incurred in this aspect of the appeal only.
Appellant to bear respondents’ costs in these consolidated appeals.
HALLER, Acting P. J.
WE CONCUR:
IRION, J.
GUERRERO, J.
47