## Facts

- A real-estate company bought an apartment building under a contract entitling the sellers to a share of proceeds from later condominium sales.
- The sellers learned the buyer was offering to sell the entire building, raising concerns that their contractual share of condominium-sale proceeds would be defeated.
- Represented by a law firm, the sellers filed an action seeking a declaration of rights and an equitable lien, and recorded a lis pendens.
- The trial court expunged the lis pendens and dismissed that action; the buyer then proceeded to market individual condominiums.
- The sellers, again represented by the same firm, filed a second action seeking damages for breach of contract; the buyer filed a cross-complaint for malicious prosecution based on the earlier lien and lis pendens theory.
- The contract claim and malicious-prosecution claim were severed; the sellers won approximately $720,000 on the contract claim.
- A jury found for the buyer on malicious prosecution and awarded compensatory and punitive damages against the law firm after being instructed to consider, among other things, the adequacy of the firm’s legal research.

## Issues

1. When the facts on which counsel acted are undisputed, is probable cause in a malicious-prosecution action a question of law for the court or a question of fact for the jury?
2. Is probable cause determined by an objective “legal tenability” standard, or may it turn on the adequacy of counsel’s research and investigation?
3. If the prior claim was objectively tenable, can a malicious-prosecution plaintiff proceed based on allegations that counsel’s research was inadequate?

## Decision

- The California Supreme Court reversed the judgment for the malicious-prosecution plaintiff.
- When the operative facts are undisputed, probable cause is a question of law for the court, not the jury.
- Probable cause turns on whether the prior action was objectively legally tenable, not on counsel’s subjective beliefs or the thoroughness of legal research.
- The equitable-lien and lis pendens theory pursued in the earlier action had an objectively reasonable legal basis; therefore probable cause existed as a matter of law and the malicious-prosecution claim failed.

## Legal Principles

- In malicious-prosecution actions, probable cause is determined by an objective standard: whether any reasonable attorney would have thought the claim legally tenable under the circumstances.
- When the historical facts relevant to counsel’s decision to file are undisputed, the existence of probable cause is a legal question to be resolved by the court.
- The probable-cause element is distinct from malice: lack of probable cause is assessed objectively; motive is addressed separately under malice.
- Evidence about the adequacy of counsel’s research may bear on malice only after the court determines the prior claim was objectively untenable; if the claim was tenable, such evidence does not defeat probable cause.

## Conclusion

The court held that probable cause in malicious prosecution is an objective legal determination for the judge when the material facts are undisputed, and because the prior lien/lis pendens claim was legally tenable, the malicious-prosecution verdict against counsel could not stand.


Sheldon Appel Co. v. Albert & Oliker, 47 Cal. 3d 863 (Cal. 1989)