## Facts

- Brent Tucker and his company held an option related to a real-estate development project and, with others, formed Alamo Orchards LLC (Alamo) to acquire and develop the property.
- Attorney Dennis P. Kahane drafted Alamo’s operating agreement and performed legal work connected to the LLC and Tucker’s interests; at meetings he was sometimes presented as counsel for the LLC.
- The operating agreement contemplated manager selection by written consent of members holding a majority of membership interests.
- Lynn Jansen provided development and contracting services for the project and invested funds for an equity interest in Alamo.
- Alamo’s members later executed a borrowing-authorization document that granted Tucker and Jansen broad authority to act for Alamo and referred to them as managers; Jansen viewed this written consent as designating him a managing member/manager.
- Disputes developed over project costs and dealings between Alamo and Tucker’s related entities, creating a potential conflict issue because Kahane represented Tucker (and/or Tucker’s company) while also appearing to act for Alamo.
- Jansen (and related parties) sued Kahane in an underlying action, alleging that Kahane, as Alamo’s attorney, owed fiduciary duties to Jansen in his claimed role as Alamo’s manager and breached duties by failing to disclose conflicts and favoring Tucker’s interests.
- Kahane ultimately prevailed in the underlying action.
- Kahane then sued Jansen (and the attorneys who represented Jansen in the underlying action) for malicious prosecution, seeking damages including reputational harm, alleging the earlier claims against him lacked probable cause.
- Defendants filed special motions to strike under California’s anti-SLAPP statute, Code of Civil Procedure section 425.16, arguing the malicious-prosecution claim arose from protected petitioning activity and that Kahane could not show a probability of prevailing.
- The trial court granted the anti-SLAPP motions, struck Kahane’s complaint, and awarded defendants attorney’s fees and costs.
- Kahane appealed.

## Issues

1. Whether Kahane showed a probability of prevailing on his malicious-prosecution claim sufficient to defeat an anti-SLAPP motion, including proof that the underlying fiduciary-duty suit lacked probable cause.
2. Whether it was objectively reasonable for Jansen and his lawyers to believe Jansen had been designated a manager/managing member of Alamo based on the operating agreement and the borrowing-authorization written consent.
3. Whether it was objectively reasonable to pursue the theory that Kahane, as attorney for Alamo (or as one who held himself out as such), owed Jansen fiduciary or conflict-disclosure duties tied to Jansen’s asserted managerial status.

## Decision

- The Court of Appeal affirmed the order granting defendants’ special motions to strike under section 425.16 and affirmed the related fee and cost awards.
- The court held that the underlying claims against Kahane were supported by probable cause because they were legally tenable, even though Kahane won the underlying case.
- The court found it objectively reasonable to treat the borrowing-authorization written consent—authorized by the operating agreement’s manager-selection mechanism—as a basis to believe Jansen was a manager and had broad authority to act for Alamo.
- The court also concluded it was not unreasonable to assert that an attorney who acted as counsel for a closely held LLC (or appeared to do so) could owe duties to the entity and, in some circumstances, to its manager or members, including duties relating to conflicts.
- Because Kahane could not establish lack of probable cause, he failed to show a probability of prevailing on malicious prosecution, and his complaint was properly stricken.

## Legal Principles

- Filing and prosecuting a lawsuit is protected petitioning activity under California’s anti-SLAPP statute.
- Once a defendant shows the claim arises from protected activity, the plaintiff must show a probability of prevailing by making a prima facie showing of facts that would support a judgment.
- Malicious prosecution requires (among other elements) favorable termination of the underlying action and lack of probable cause for the prior claims.
- Probable cause is assessed under an objective, lenient standard: a prior claim has probable cause if it is legally tenable; liability is limited to suits that any reasonable attorney would agree are totally and completely without merit.
- Written governance documents for an LLC, including written consents authorized by an operating agreement, can supply an objectively reasonable basis to claim managerial status and authority.
- Even when the underlying plaintiff ultimately loses, an arguable legal theory about an attorney’s duties in the context of a closely held entity can be enough to establish probable cause and defeat a later malicious-prosecution claim.

## Conclusion

Kahane v. Jansen affirmed an anti-SLAPP dismissal of an attorney’s malicious-prosecution lawsuit because the earlier fiduciary-duty case against him was not objectively baseless: the operating agreement and borrowing-authorization written consent made it reasonable to believe Jansen was an Alamo manager, and the fiduciary-duty/conflict-disclosure theory against counsel for a closely held LLC was at least legally tenable, defeating the required showing of lack of probable cause.


Kahane v. Jansen, 2008 WL 5077628 (2008)