August 2021 | Can Contempt of Court Support a Malicious Prosecution Claim?

Second generation cases against opposing party and counsel can be tricky. After a lawsuit where a judgment was obtained against the Defendant (Kim), a company initiated a collections action against Kim (the judgment debtor). When the judgment debtor allegedly violated a collections order, the company asked the court to hold him in contempt. After a contempt trial, the court dismissed the contempt charges. Kim then sued the company and its law firm for malicious prosecution. The trial court granted the law firm’s motion to dismiss under the Anti-SLAPP statute. The Fourth District California Court of Appeals considered whether the unsuccessful contempt of court proceedings can form the basis for a malicious prosecution lawsuit. (Kim v. R Consulting & Sales, Inc., et al., No. D076923 (Ct. App. July 30, 2021).)

Facts of the Case

R Consulting sued Andy Kim and his company Info Tech for breach of a contract to make airplane lease payments. Kim and Info Tech cross-complained in the lawsuit, alleging that R Consulting and several people made false representations about the airplane. R Consulting made requests for emails stored on the Info Tech servers. When Kim didn’t produce the emails or servers, R Consulting filed a motion requesting that the court order Kim to do so. The court entered this order. But when R Consulting finally gained access to the server, it was inoperable. R Consulting asked the court to issue terminating sanctions due to alleged intentional sabotage of the server, and the court granted the request entering judgment in favor of R Consulting and against Kim and Info Tech. Kim and Info Tech then appealed the order granting terminating sanctions.

After the judgment in that case, R Consulting and its law firm, Metsch & Mason, started collections proceedings against Kim. Kim was required to participate in judgment debtor examinations. Kim had to give the court in the collections case copies of his paychecks and pay a portion of his income against the debt to R Consulting. R Consulting then filed a motion alleging that Kim was in contempt of court because he failed to cooperate with the collections proceeding by failing to appear at four judgment debtor examinations, violated the salary turnover order, and committed perjury. The court granted the motion and set a trial for the contempt of court. Following the trial, the court found Kim not guilty of contempt and dismissed all charges.

Kim then sued R Consultingand R Consulting’s lawyers, Michel, Ricotta, Mason & Metsch LLP and Mason and Metsch individually). Kim alleged malicious prosecution, abuse of process, and intentional infliction of emotional distress relating to their efforts to hold him in contempt. The defendants filed two motions to strike the complaint under Code of Civil Procedure section 425.16, the anti-SLAPP statute. They argued that contempt proceedings could not be the basis of a malicious prosecution lawsuit because contempt is a procedural action. The trial court did not decide this issue, instead granting the law firm’s motion because it concluded that Kim could not show a probability of success, failing to show a lack of probable cause to initiate the contempt proceedings. Kim appealed.

Can Contempt Proceedings Form the Basis for a Malicious Prosecution Lawsuit?

In California, the anti-SLAPP statute (Strategic Lawsuit Against Public Participation) states: “[a] cause of action against a person arising from any act of that person in furtherance of the person’s right of petition or free speech under the United States Constitution or the California Constitution in connection with a public issue shall be subject to a special motion to strike, unless the court determines that the plaintiff has established that there is a probability that the plaintiff will prevail on the claim.” (Code Civ. Proc. § 425.16, subd. (b)(1).) The defendant must show that the claim arises from protected free speech activity, if so, then the burden shifts to the plaintiff to establish the probability of success on the claim.

Here, the Court of Appeal found there is no dispute that the defendants were engaging in protected activity. This is because a malicious prosecution action inherently refers back to an underlying lawsuit in which, the plaintiff claims, he was maliciously sued by the defendants. However, the Court determined that Kim cannot establish his probability of succeeding on the claim. The court found that an OSC for contempt does not meet the basis for a malicious prosecution claim. To prevail on a malicious prosecution claim, Kim would need to show that the defendants “brought the action without probable cause” and “initiated the action with malice.” Moreover, a malicious prosecution action cannot be based on a merely procedural or defensive action. (Merlet v. Rizzo (1998) 64 Cal.App.4th 53, 59.) Otherwise, claimants could disrupt ongoing lawsuits by filing suit against the opposing lawyers, and because the appropriate remedy should occur by the court invoking its powers.

The Court reviewed several cases showing a split of authority regarding whether contempt proceedings can form the basis for a malicious prosecution lawsuit. A key issue in those cases was the status of the contempt case: was it a “separate proceeding with an independent existence”, or was it inextricably tied to an underlying action? Here, the contempt hearing occurred in the context of lengthy litigation and concerned repeated efforts at engaging Kim in post judgment debtor examinations. Without the underlying litigation, there would be no contempt case. Further, since the contempt case was initiated as a procedural action during collections, Kim could not base his malicious prosecution claim on it. The court found at issue was a civil contempt proceeding, not a criminal contempt. Since Kim could not show a probability of success, the Court of Appeal affirmed the trial court’s judgment in favor of the Defendants and against Kim.

The Takeaway

Second generation cases against adverse parties and lawyers frequently end up dismissed under the anti-SLAPP statute because of California’s policy favoring free speech. The Kim case illustrates the distinction between criminal contempt and civil contempt. Because a civil contempt hearing based on a group of related lawsuits would not have been filed without the underlying collection litigation, the Court of Appeal concluded that it could not be the basis for a malicious prosecution claim. For abusive tactics by opposing party and counsel in a civil case, the best remedy is to seek sanctions while the case is active.