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Johnson v. Altamirano

United States District Court, S.D. California

December 2, 2019

ANTHONY JOHNSON, Plaintiff,
v.
MANUEL ALTAMIRANO, an individual; RICHARD TURNER, an individual; DAVID KINNEY, an individual; DAVID HUFFMAN, an individual; PAUL TYRELL, an individual; SEAN SULLIVAN, an individual; STORIX, INC., a California corporation; and DOES 1-5, inclusive, Defendants.

         ORDER: (1) GRANTING IN PART AND DENYING IN PART DEFENDANTS ALTAMIRANO, HUFFMAN, KINNEY, AND TURNER'S MOTION TO DISMISS; [DOC. NO. 30.] (2) GRANTING DEFENDANTS STORIX, TYRELL, AND SULLIVAN'S MOTIONS TO DISMISS WITH PREJUDICE; [DOC. NOS. 31, 32.] (3) GRANTING IN PART AND DENYING IN PART DEFENDANTS ALTAMIRANO, HUFFMAN, KINNEY, AND TURNER'S ANTI-SLAPP MOTION TO STRIKE; [DOC. NO. 29.] (4) GRANTING DEFENDANTS TYRELL AND SULLIVAN'S ANTI-SLAPP MOTION TO STRIKE; AND [DOC. NO. 33.] (5) DENYING DEFENDANTS ALTAMIRANO, HUFFMAN, KINNEY, AND TURNER'S MOTION FOR AN UNDERTAKING UNDER CAL. CIV. PROC. CODE § 1030 [DOC. NO. 28.]

          MARILYN L. HUFF, DISTRICT JUDGE UNITED STATES DISTRICT COURT

         On August 29, 2019, Defendants Manuel Altamirano, David Huffman, David Kinney, and Richard Turner filed a motion to dismiss Plaintiff Anthony Johnson's complaint pursuant to Federal Rule of Civil Procedure 12(b)(6); an anti-SLAPP motion to strike pursuant to California Code of Civil Procedure § 425.16; and a motion for an order requiring Plaintiff to comply with a statutory undertaking pursuant to California Code of Civil Procedure § 1030. (Doc. Nos. 28, 29, 30.) On August 30, 2019, Defendants Paul Tyrell and Sean Sullivan filed a motion to dismiss Plaintiff's complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) and an anti-SLAPP motion to strike pursuant to California Code of Civil Procedure § 425.16. (Doc. Nos. 32, 33.) On August 30, 2019, Defendant Storix Inc. filed a motion to dismiss Plaintiff's complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). (Doc. No. 31.) On September 17, 2019, Plaintiff filed his responses in oppositions to Defendants' motions. (Doc. Nos. 39, 40, 41, 42, 43, 44.) On September 30, 2019, Defendants filed their replies. (Doc. Nos. 53, 54, 55, 56, 57, 58.) On October 1, 2019, the Court took the matters under submission. (Doc. No. 59.)

         On October 9, 2019, the Court requested supplemental briefing on the issue of res judicata as to Plaintiff's claim for conversion. (Doc. No. 62.) On October 25, 2019, Defendants Altamirano, Huffman, Kinney, and Turner filed their opening supplemental brief. (Doc. No. 66.) On November 7, 2019, Plaintiff filed his responsive supplemental brief. (Doc. No. 67.) On November 15, 2019, Defendants Altamirano, Huffman, Kinney, and Turner filed their reply supplemental brief. (Doc. No. 69.) For the reasons below, the Court: (1) grants in part and denies in part Defendants Altamirano, Huffman, Kinney, and Turner's motion to dismiss; (2) grants Defendants Storix, Tyrell, and Sullivan's motions to dismiss; (3) grants in part and denies in part Defendants Altamirano, Huffman, Kinney, Turner's motions to strike; (4) grants Defendants Tyrell and Sullivan's motion to strike; and (5) denies Altamirano, Huffman, Kinney, and Turner's motion for a statutory undertaking.

         Background

         I. The Prior Federal Action

         On August 8, 2014, Anthony Johnson - the Plaintiff in this action - filed a complaint in federal court, Case No. 14-cv-1873-H-BLM, against Storix - one of the defendants in this action - alleging claims for: (1) federal copyright infringement under the Copyright Act of 1976, 17 U.S.C. § 101, et seq.; (2) contributory copyright infringement; and (3) vicarious copyright infringement.[1] (Doc. No. 34-2, RJN Ex. 1.) On September 19, 2014, Storix filed an answer to Johnson's complaint and counterclaims for: (1) a declaratory judgment of non-infringement; and a declaratory judgment that it is the owner of the copyrights at issue. (Id. Ex. 2.)

         The action was tried before a jury beginning on December 8, 2015. (Doc. No. 34-2, RJN Ex. 3 at 1.) On December 15, 2015, the jury returned a verdict that was in favor of Storix on all causes of action. (Id. at 2.) Specifically, in the verdict, the jury found that “Storix, Inc. proved by a preponderance of the evidence that Anthony Johnson's copyright infringement claim against Storix, Inc. is barred because Anthony Johnson transferred ownership of all pre-incorporation copyrights, including SBAdmin Version 1.3, in writing from himself to Storix, Inc.” (Id.) On November 16, 2016, the Court entered an amended judgment incorporating the jury's verdict “in favor of Defendant and Counter-Claimant Storix, and against Plaintiff Anthony Johnson.” (Id. at 3.)

         Johnson appealed the Court's judgment to the United States Court of Appeals for the Ninth Circuit. On December 19, 2017, the Ninth Circuit affirmed in part, reversed in part, and remanded for further proceedings. Johnson v. Storix, Inc., 716 Fed.Appx. 628, 632 (9th Cir. 2017), cert. denied, 139 S.Ct. 76 (2018). In the decision, the Ninth Circuit affirmed the jury's verdict on liability, as well as the Court's decision to award Storix attorneys' fees. Id. at 631. However, the Ninth Circuit held that the fees awarded were “unreasonable, ” and remanded with instructions for the Court “to reconsider the amount.” Id. at 632.

         On August 7, 2018, after issuing an order awarding attorneys' fees on remand, the Court entered a second amended judgment in the action. (Doc. No. 34-2, RJN Ex. 6.) On August 14, 2018, Plaintiff appealed the Court's second amended judgment to the Ninth Circuit. Johnson v. Storix, Inc., No. 14-cv-01873-H-BLM, Docket No. 304 (S.D. Cal. Aug. 14, 2018). Plaintiff's appeal of the amount of attorneys' fees is currently pending before the Ninth Circuit. See Johnson v. Storix, Inc., No. 18-56106 (9th Cir., filed Aug. 16, 2018).

         II. The State Court Actions

         On August 20, 2015, Storix filed a complaint in state court, Case No. 37-2015-28262-CU-BT-CTL, against Anthony Johnson and Janstor Technology, alleging claims for: (1) breach of fiduciary duty against Johnson; and (2) aiding and abetting breach of fiduciary duty against Janstor. (Doc. No. 34-2, RJN Ex. 8.) On October 13, 2015, Anthony Johnson along with Robin Sassi filed a derivative complaint on behalf of Storix in state court, Case No. 37-2015-34545-CU-BT-CTL, against David Huffman, Richard Turner, Manuel Altamirano, David Kinney, and David Smiljkovich, alleging claims for: (1) breach of fiduciary duty; (2) abuse of control; (3) corporate waste; and (4) an accounting. (Doc. No. 34-3, RJN Ex. 14.) The two actions were subsequently consolidated by the state court.

         On March 14, 2016, Storix filed a first amended complaint in Case No. 37-2015-28262, alleging the same two causes of action. (Doc. No. 34-2, RJN Ex. 9.) On April 13, 2016, Johnson filed a cross-complaint in Case No. 37-2015-28262 against David Huffman, Richard Turner, Manuel Altamirano, David Kinney, and David Smiljkovich, alleging claims for: (1) breach of fiduciary duty; (2) civil conspiracy; and (3) fraud. (Id. Ex. 13.) On June 2, 2016, Johnson and Sassi filed a first amended complaint in the derivative action, alleging the same four causes of action. (Doc. No. 34-3, RJN Ex. 15.) On September 6, 2016, Storix filed a second amended complaint in Case No. 37-2015-28262, alleging the same two causes of action for: (1) breach of fiduciary duty against Johnson; and (2) aiding and abetting breach of fiduciary duty against Janstor. (Doc. No. 34-2, RJN Ex. 11.)

         Following a jury trial, on February 20, 2018, a jury returned a verdict in Case No. 37-2015-28262 in favor of Storix and against Johnson on Storix's claim for breach of fiduciary duty and against Johnson on all of his cross-claims. (Doc. No. 34-4, RJN Ex. 17.) Specifically, in the verdict, the jury found that “Anthony Johnson breach[ed] his duty of loyalty by knowingly acting against Storix, Inc.'s interests while serving on the Board of Directors of Storix, Inc.” (Id. at 1.) In addition, the jury award Storix $3, 739.14 “as a result of Anthony Johnson's acts or conduct in breach of a fiduciary duty or duties owed to Storix, Inc.” (Id. at 2.)

         On May 16, 2018, after a bench trial, the state court issued a decision and order on the claims in the derivative action, finding in favor of the defendants and against the plaintiff on all four causes of action. (Doc. No. 34-4, RJN Ex. 20.) On September 12, 2018, the state court entered a consolidated judgment in the two actions as follows: (1) “[i]n favor of plaintiff Storix, Inc. and against Defendant Anthony Johnson on Storix Inc's complaint for breach of fiduciary duty;” (2) “Cross-Complainant Anthony Johnson shall take nothing from Cross-Defendants David Huffman, Richard Turner, Manuel Altamirano, David Kinney, and David Smiljkovich, or any of them, on the Cross-Complaint filed in Case No. 37-2015-00028262-CU-BT-CTL;” (3) Plaintiffs Anthony Johnson and Robin Sassi shall take nothing from Defendants David Huffman, Richard Turner, Manuel Altamirano, David Kinney, and David Smiljkovich, or any of them on the First Amended Derivative Complaint filed in Case No. 37-2015-00034545-CUBT-CTL.” (Id. Ex. 22.) In December 2018, Plaintiff appealed the September 12, 2018 consolidated judgment to the California Court of Appeal. (Doc. No. 63-1, Exs. C, D.) Plaintiff's appeal is currently pending before the California Court of Appeal. See Storix, Inc. v. Johnson, No. D075308 (Cal. App., filed Dec. 10, 2018).

         III. The Present Action

         On June 24, 2019, Plaintiff Anthony Johnson, proceeding pro se, filed a complaint against Defendants Manuel Altamirano, Richard Turner, David Kinney, David Huffman, Paul Tyrell, Sean Sullivan, and Storix, Inc., alleging causes of action for: (1) malicious prosecution; (2) breach of fiduciary duty; (3) conversion; (4) economic interference; (5) breach of contract; (6) rescission; and (7) indemnification. (Doc. No. 1, Compl.) On September 30, 2019, the Court denied Plaintiff's motion for recusal under 28 U.S.C. §§ 144 and 455(a). (Doc. No. 51.) On October 2, 2019, Plaintiff filed a petition for writ of mandamus with the United States Court of Appeals for the Ninth Circuit, challenging the Court's denial of his motion for recusal. (Doc. No. 60.) On November 22, 2019, the Ninth Circuit denied Plaintiff's petition for writ of mandamus and closed the case. In re Johnson, No. 19-72507, Docket No. 3 (9th Cir. Nov. 22, 2019). (Doc. No. 71.)

         By the present motions: (1) Defendants Altamirano, Turner, Kinney, and Huffman move pursuant to Federal Rule of Civil Procedure 12(b)(6) to dismiss all of the claims in Plaintiff's complaint, (Doc. No. 30); (2) Defendant Storix moves pursuant to Rule 12(b)(6) to dismiss Plaintiff's claims for breach of contract, rescission, and indemnification, (Doc. No. 31); (3) Defendants Tyrell and Sullivan move pursuant to Rule 12(b)(6) to dismiss Plaintiff's claim for malicious prosecution, (Doc. No. 32); (4) Defendants Altamirano, Turner, Kinney, and Huffman move pursuant to California's anti-SLAPP statute, California Code of Civil Procedure § 425.16, to strike Plaintiff's claims for malicious prosecution and breach of fiduciary duty, (Doc. No. 29); (5) Defendants Tyrell and Sullivan move pursuant to California's anti-SLAPP statute to strike Plaintiff's claim for malicious prosecution, (Doc. No. 33); and (6) Defendants Altamirano, Turner, Kinney, and Huffman move for an order requiring Plaintiff to file an undertaking pursuant to California Code of Civil Procedure § 1030. (Doc. No. 28.)

         Discussion

         I. Defendants' Rule 12(b)(6) Motions to Dismiss

         A. Legal Standards for a Rule 12(b)(6) Motion to Dismiss

         A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) tests the legal sufficiency of the pleadings and allows a court to dismiss a complaint if the plaintiff has failed to state a claim upon which relief can be granted. See Conservation Force v. Salazar, 646 F.3d 1240, 1241 (9th Cir. 2011). Federal Rule of Civil Procedure 8(a)(2) requires that a pleading stating a claim for relief containing “a short and plain statement of the claim showing that the pleader is entitled to relief.” The function of this pleading requirement is to “give the defendant fair notice of what the . . . claim is and the grounds upon which it rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007).

         A complaint will survive a Rule 12(b)(6) motion to dismiss if it contains “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). “A pleading that offers ‘labels and conclusions' or ‘a formulaic recitation of the elements of a cause of action will not do.'” Id. (quoting Twombly, 550 U.S. at 555). “Nor does a complaint suffice if it tenders ‘naked assertion[s]' devoid of ‘further factual enhancement.'” Id. (quoting Twombly, 550 U.S. at 557). Accordingly, dismissal for failure to state a claim is proper where the claim “lacks a cognizable legal theory or sufficient facts to support a cognizable legal theory.” Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th Cir. 2008).

         In reviewing a Rule 12(b)(6) motion to dismiss, a district court must accept as true all facts alleged in the complaint, and draw all reasonable inferences in favor of the claimant. See Retail Prop. Trust v. United Bhd. of Carpenters & Joiners of Am., 768 F.3d 938, 945 (9th Cir. 2014). But, a court need not accept “legal conclusions” as true. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Further, it is improper for a court to assume the claimant “can prove facts which it has not alleged or that the defendants have violated the . . . laws in ways that have not been alleged.” Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters, 459 U.S. 519, 526 (1983).

         In addition, a court may consider documents incorporated into the complaint by reference and items that are proper subjects of judicial notice. See Coto Settlement v. Eisenberg, 593 F.3d 1031, 1038 (9th Cir. 2010). Further, “[a] pro se complaint must be ‘liberally construed,' since ‘a pro se complaint, however inartfully pleaded, must be held to less stringent standards than formal pleadings drafted by lawyers.'” Entler v. Gregoire, 872 F.3d 1031, 1038 (9th Cir. 2017) (quoting Erickson v. Pardus, 551 U.S. 89, 94 (2007)).

         If the court dismisses a complaint for failure to state a claim, it must then determine whether to grant leave to amend. See Doe v. United States, 58 F.3d 494, 497 (9th Cir. 1995). “A district court may deny a plaintiff leave to amend if it determines that ‘allegation of other facts consistent with the challenged pleading could not possibly cure the deficiency,' or if the plaintiff had several opportunities to amend its complaint and repeatedly failed to cure deficiencies.” Telesaurus VPC, LLC v. Power, 623 F.3d 998, 1003 (9th Cir. 2010) (internal quotation marks and citations omitted).

         B. Plaintiff's Claim for Malicious Prosecution

         In the complaint, Plaintiff alleges a cause of action for malicious prosecution against Defendants Altamirano, Turner, Kinney, Huffman, Tyrell and Sullivan. (Doc. No. 1, Compl. ¶¶ 37-43.) Defendants Altamirano, Turner, Kinney, Huffman, Tyrell and Sullivan argue that this claim should be dismissed because Plaintiff cannot allege that the underlying prior action was terminated in his favor. (Doc. No. 30-1 at 3-5; Doc. No. 32-1 at 10-15.)

         In California, a claim for malicious prosecution “consists of three elements. The underlying action must have been: (i) initiated or maintained by, or at the direction of, the defendant, and pursued to a legal termination in favor of the malicious prosecution plaintiff; (ii) initiated or maintained without probable cause; and (iii) initiated or maintained with malice.” Parrish v. Latham & Watkins, 3 Cal. 5th 767, 775 (2017). The California Supreme Court has noted that “[m]alicious prosecution actions have traditionally been disfavored as potentially chilling the right to pursue legal redress and report crime.” Siebel v. Mittlesteadt, 41 Cal.4th 735, 740 (2007); accord Sheldon Appel Co. v. Albert & Oliker, 47 Cal.3d 863, 872 (1989).

         “‘Favorable termination . . . is an essential element of the tort of malicious prosecution, and it is strictly enforced.'” Lane v. Bell, 20 Cal.App. 5th 61, 68 (2018), review denied (Apr. 18, 2018); see also Siebel, 41 Cal.4th at 741 (“‘[I]t is hornbook law that the plaintiff in a malicious prosecution action must plead and prove that the prior judicial proceeding of which he complains terminated in his favor.'” (quoting Casa Herrera, Inc. v. Beydoun, 32 Cal.4th 336, 341 (2004))). In determining whether a party has received a favorable termination, a court should consider “the judgment as a whole in the prior action.” Siebel, 41 Cal.4th at 741 (internal quotation marks omitted) (quoting Casa Herrera, 32 Cal.4th at 341). The California Supreme Court has clarified that in order for this element to be satisfied “‘there must first be a favorable termination of the entire action.'” Crowley v. Katleman, 8 Cal.4th 666, 686 (1994) (emphasis in original).

         Here, Plaintiff's claim for malicious prosecution is based on the prior state court action Storix, Inc. v. Johnson, San Diego Superior Court Case No. 2015-00028262-CU-BT-CTL. (Doc. No. 1, Compl. ¶¶ 17, 38-40, 42.) In his complaint in the present action, Plaintiff alleges that in the prior action, the state court adopted the jury's verdict in his favor. (Id. ¶ 27.) But this allegation is directly contradicted by the judicially noticeable state court documents.

         Under Federal Rule of Evidence 201, “[a] court may take judicial notice of ‘matters of public record' without converting a motion to dismiss into a motion for summary judgment.” Lee v. City of Los Angeles, 250 F.3d 668, 690 (9th Cir. 2001). “Court orders and filings are proper subjects of judicial notice.” Vasserman, 65 F.Supp.3d at 942-43; see Black, 482 F.3d at 1041; ScripsAmerica, 56 F.Supp.3d at 1136. Further, in deciding a Rule 12(b)(6) motion to dismiss, a court need not accept as true allegations that “‘contradict matters properly subject to judicial notice.'” In re Gilead Scis. Sec. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008); accord Shwarz v. United States, 234 F.3d 428, 435 (9th Cir. 2000).

         The judicially noticeable state court documents show that in Storix, Inc. v. Johnson, San Diego Superior Court Case No. 2015-00028262-CU-BT-CTL, Storix asserted a single cause of action for breach of fiduciary duty against Johnson. (Doc. No. 34-2, RJN Exs. 8, 9, 11.) Following a jury trial, the jury returned a verdict finding that “Anthony Johnson breach[ed] his duty of loyalty by knowingly acting against Storix, Inc.'s interests while serving on the Board of Directors of Storix, Inc.” (Doc. No. 34-4, RJN Ex. 17 at 1.) In addition, the jury award Storix $3, 739.14 “as a result of Anthony Johnson's acts or conduct in breach of a fiduciary duty or duties owed to Storix, Inc.” (Id. at 2.) On September 12, 2018, the state court entered judgment in a consolidated action that included Case No. 2015-00028262-CU-BT-CTL. (Doc. No. 34-4, RJN Ex. 22.) In the judgment, the state court entered judgment “[i]n favor of plaintiff Storix., Inc. and against Defendant Anthony Johnson on Storix Inc.'s complaint for breach of fiduciary duty.” (Id. at 8.)

         Thus, a review of the state court judgment in the prior action shows that a judgment was entered against Plaintiff on Storix's claim for breach of fiduciary duty. (See id.) As such, Plaintiff cannot plausibly allege a favorable termination of the entire underlying action in his favor. The prior action concluded with a judgment against him. Thus, Plaintiff's claim for malicious prosecution fails as a matter of law. See Crowley, 8 Cal.4th at 686; Lane, 20 Cal.App. 5th at 76

         In response, Plaintiff argues that his claim for malicious prosecution can proceed despite that state court judgment because his malicious prosecution claim is based on a different and severable claim from the claim was adjudicated against him in the prior action. (Doc. No. 40 at 3-7; Doc. No. 41 at 4-7.) But even assuming Plaintiff's malicious prosecution claim is based a different and severable claim from the claim that was ultimately entered against him in the prior action, the California Supreme Court has held that in order for the favorable termination element to be satisfied “‘there must first be a favorable termination of the entire action.'”[2] Crowley, 8 Cal.4th at 686 (emphasis in original).

         The Court acknowledges that some California Court of Appeal decisions have held that “‘a malicious prosecution plaintiff is not precluded from establishing favorable termination where severable claims are adjudicated in his or her favor.'” Lanz v. Goldstone, 243 Cal.App.4th 441, 460 (2015) (quoting Sierra Club Found. v. Graham, 72 Cal.App.4th 1135, 1153 (1999)); see Paramount Gen. Hosp. Co. v. Jay, 213 Cal.App.3d 360, 369 (1989). But other California Court of Appeal decisions have held that a malicious prosecution plaintiff must show “there [was] a favorable termination of the entire [underlying] action in [his] favor, and that a partial recovery against the malicious prosecution plaintiff in the underlying action is fatal to showing the favorable termination element.” Lane, 20 Cal.App. 5th at 75; see Staffpro, Inc. v. Elite Show Servs., Inc., 136 Cal.App.4th 1392, 1405 (2006) (“[S]everability analysis is improper in determining whether a malicious prosecution plaintiff has demonstrated favorable termination of an underlying lawsuit.”); Dalany v. Am. Pac. Holding Corp., 42 Cal.App.4th 822, 829 (1996); Jenkins v. Pope, 217 Cal.App.3d 1292, 1300 (1990) (“[T]he Supreme Court's holding that a malicious prosecution suit may be maintained where only one of several claims in the prior action lacked probable cause does not alter the rule there must first be a favorable termination of the entire action.” (citation omitted))

         The reasoning and analysis presented in the Lane v. Bell case is persuasive. See 20 Cal.App. 5th at 68-76. Lane and the latter decisions comport with the California Supreme Court's holding in Crowley that in order for a malicious prosecution plaintiff to satisfy the favorable termination element, “‘there must first be a favorable termination of the entire action.'” Crowley, 8 Cal.4th at 686 (emphasis in original). In addition, the Court notes that the Ninth Circuit has issued several decisions following the holdings in Crowley and Staffpro, albeit unpublished decisions. See, e.g., Cairns v. Cty. of El Dorado, 694 Fed.Appx. 534, 535 (9th Cir. 2017) (“Because Kevin Cairns was convicted of disturbing the peace in the same action in which he was acquitted of four other offenses, he cannot demonstrate that he was successful in the entire criminal action. The malicious prosecution claim therefore fails as a matter of law.” (citations omitted)); Rezek v. City of Tustin, 684 Fed.Appx. 620, 622 (9th Cir. 2017); Law Offices of Bruce Altschuld v. Wilson, 632 Fed.Appx. 321, 323-24 (9th Cir. 2015) (“The California Supreme Court has squarely held that the favorable termination element requires ‘a favorable termination of the entire action.' Contrary to Plaintiffs' contention, Crowley's holding, ‘which requires judgment to have been reached in the plaintiff's favor in the prior action as a whole, cannot coexist with an exception for partial favorable termination.'” (citations omitted)); see also, e.g., DeVaughn v. Cty. of Los Angeles, No. CV 08-1461 AB (FFM), 2018 WL 7324527, at *9 (C.D. Cal. Dec. 12, 2018), report and recommendation adopted by No. CV 08-1461 AB (FFM), 2019 WL 631887 (C.D. Cal. Feb. 13, 2019) (“California courts look to the ‘judgment as a whole' when determining whether favorable termination exists. Under this rule, it is not sufficient that some or most of the claims in the prior action terminated in favor of the malicious prosecution plaintiff. Rather, for a malicious prosecution claim to lie under California law, ‘there must first be a favorable termination of the entire action.'”).

         Here, Plaintiff cannot plausibly allege that the entire underlying action was terminated in his favor because the judicially noticeable state court documents show that a judgment was entered against him on Storix's claim for breach of fiduciary duty in the prior action. (See Doc. No. 34-4, RJN Ex. 22 at 8.) As a result, Plaintiff cannot satisfy the essential element of favorable termination, and Plaintiff's claim for malicious prosecution fails as a matter of law. See Lane, 20 Cal.App. 5th at 76 (“[T]he Lanes cannot establish the essential element of favorable termination because the entire underlying action was not terminated in the Lanes' favor.”); Crowley, 8 Cal.4th at 686. Further, because the defect in Plaintiff's malicious prosecution claim is not one that can be cured through amendment of the complaint, the Court dismisses Plaintiff's claim for malicious prosecution with prejudice.[3]

         C. Plaintiff's Claim for Indemnification

         In the complaint, Plaintiff alleges a cause of action for indemnification against Defendants Storix, Altamirano, Turner, Kinney, and Huffman. (Doc. No. 1, Compl. ¶¶ 68-71.) In this claim, Plaintiff alleges that he is entitled to indemnification by Storix under California Corporations Code § 317(d) and Storix's bylaws for all expenses he incurred in connection with his successful defense of any issues, claims or matters in Storix, Inc. v. Johnson, San Diego Superior Court Case No. 2015-00028262-CU-BT-CTL. (Id. ¶¶ 30, 69-70.) In response, Defendants argues that this claim should be dismissed because Plaintiff was not successful in the prior lawsuit, and, therefore, he is not entitled to indemnification under California Corporations Code § 317(d). (Doc. No. 30-1 at 19; Doc. No. 31-1 at 19-21.)

         California Corporations Code § 317(c) provides: “A corporation shall have power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending, or completed action by or in the right of the corporation to procure a judgment in its favor by reason of the fact that the person is or was an agent of the corporation, against expenses actually and reasonably incurred by that person in connection with the defense or settlement of the action if the person acted in good faith, in a manner the person believed to be in the best interests of the corporation and its shareholders.” California Corporations Code § 317(d) further provides: “To the extent that an agent of a corporation has been successful on the merits in defense of any proceeding referred to in subdivision (b) or (c) or in defense of any claim, issue, or matter therein, the agent shall be indemnified against expenses actually and reasonably incurred by the agent in connection therewith.”

         “The policy considerations behind [Section 317 is] that persons who serve the corporation in good faith should, in the absence of certain conduct (fraud, breach of fiduciary duties, etc.) be free from liability for corporate acts; indemnification encourages capable persons to perform their duties, secure in the knowledge that expenses incurred by them despite their honesty and integrity will be borne by the corporation.” Plate v. Sun-Diamond Growers, 225 Cal.App.3d 1115, 1122-23 (1990); accord Wilshire-Doheny Assocs. Ltd. v. Shapiro, 83 Cal.App.4th 1380, 1388-89 (2000).

         Under California Corporations Code § 317(d), “[i]f the corporate agent accused of wrongdoing wins a judgment on the merits in defense of the action, indemnification is mandatory.” Groth Bros. Oldsmobile v. Gallagher, 97 Cal.App.4th 60, 73 (2002) (emphasis removed). But section 317(d), by its terms, requires “a showing that the agent has been ‘successful on the merits in defense of [the] proceeding.'” Wilshire-Doheny, 83 Cal.App.4th at 1391 (quoting Cal. Corp. Code § 317(d)). The California Court of Appeal has explained that in order for a plaintiff to recover under section 317(d), the plaintiff “must make the same showing of a prior favorable termination required to maintain a malicious prosecution action.” Dalany, 42 Cal.App.4th at 830.

         Here, the Court has dismissed Plaintiff's claim for malicious prosecution based on the state court action Storix, Inc. v. Johnson, San Diego Superior Court Case No. 2015-00028262-CU-BT-CTL with prejudice specifically on the grounds that Plaintiff cannot satisfy the favorable termination element of his malicious prosecution claim as a matter of law. See Lane, 20 Cal.App. 5th at 76; Crowley, 8 Cal.4th at 686; Cairns, 694 Fed.Appx. at 535; Rezek, 684 Fed.Appx. at 622; Law Offices of Bruce Altschuld, 632 Fed.Appx. at 323- 24. A judgment was entered against Plaintiff on Storix's claim for breach of fiduciary duty in that action. (See Doc. No. 34-4, RJN Ex. 22 at 8.) As such, Plaintiff's claim for indemnification is also defective as a matter of law, and the Court dismisses Plaintiff's claim for indemnification with prejudice.[4] See Dalany, 42 Cal.App.4th at 830 (after finding that plaintiff could not establish the favorable termination element of his malicious prosecution claim, holding that “his indemnity cause of action is also defective”).

         D. Plaintiff's Claims for Breach of ...


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