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Lawyers who discover they’re pressing a meritless suit now have a stronger reason than ever to pull out while they can. On Wednesday, a divided panel of Los Angeles’ 2nd District Court of Appeal ruled that attorneys could be liable for malicious prosecution if they pursue a suit after discovery reveals no viable claim. The 2-1 ruling directly contradicts an 11-month-old decision by another panel of the same court that says a lawyer can’t be liable for malicious prosecution so long as there was probable cause to sue based on facts known to him at the time he filed. “It makes little sense to hold attorneys accountable for their knowledge when they file a lawsuit, but not for their knowledge the next day,” Justice Richard Mosk of Division Five wrote. “There is no logic in immunizing attorneys from liability for malicious prosecution simply because the attorneys think there is probable cause when they file the lawsuits, if shortly thereafter they discover the lawsuits have no merit but they continue to prosecute them.” Justice Orville Armstrong concurred, but Justice Margaret Grignon dissented from that part of the ruling, saying she agreed with her Division Seven colleagues’ contrary holding last year in Swat-Fame Inc. v. Goldstein, 101 Cal.App.4th 613. In Zamos v. Stroud, 03 C.D.O.S. 5831, Woodland Hills, Calif., lawyer Jerome Zamos sued Van Nuys, Calif., attorney James Stroud for malicious prosecution after a former client, Patricia Brookes, hired the Stroud & Do partner in a fraud suit against Zamos. Brookes had sued Zamos in 1997, claiming he had made many misrepresentations in settling — for $250,000 — a suit arising from the foreclosure of her house. Among Brookes’ claims were that Zamos had vowed to continue to represent her against non-settling defendants, and that he would have her house returned to her. Stroud and two others Zamos sued — Carl Taylor and Nancy Peterson, who were witnesses to Brookes’ claims — filed an anti-SLAPP motion in which they argued that Zamos could not show a reasonable probability of success in the malicious prosecution action. Los Angeles County Superior Court Judge Stephen Petersen granted the motion. The appeal court majority, however, found that trial transcripts from the foreclosure case indicated that Zamos had made none of the promises claimed by Brookes, and that Stroud knew her statements were false. “That conduct,” Mosk wrote, “could demonstrate ‘a subjective intent to deliberately misuse the legal system’ and thus constitutes malice.” Though Mosk said Judge Petersen erred in granting Stroud’s anti-SLAPP motion, he found relief was properly granted for the two witnesses, Taylor and Petersen. In disagreeing with their colleagues’ in Swat-Fame, the majority justices relied partly on dictum in the California Supreme Court’s 1990 ruling in Pacific Gas & Electric Co. v. Bear Stearns & Co., 50 Cal.3d 1118. In that case, Mosk wrote, the high court cited with approval, “albeit in dictum,” Section 674 of the Restatement Second of Torts, which says that anyone who “takes an active part in the initiation, continuation or procurement of civil proceedings against another is subject to liability.” Zamos couldn’t be reached for comment Wednesday, but Stroud expressed deep disappointment, saying the trial record doesn’t support liability for him or his firm. “There was evidence in the record that Mr. Zamos had made these representations,” he said, “and the fact that there were transcripts didn’t necessarily contradict that, because these were representations made outside the court. I had witnesses that said Mr. Zamos wasn’t telling the truth.” Stroud said he will ask the appeal court panel to reconsider its ruling and if turned down try the Supreme Court. “You can start a case based on X and Y and Z,” he said, “and if X turns out not to be correct, or Y turns out not to be correct or Z turns out not to be correct, this court says you have to dump your client or jump off the ship. And I don’t think the Supreme Court means that’s what the law is to be.”

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