Panel ‘infers malice’ in Fox Rothschild malicious prosecution case

The 2nd District Court of Appeal reinstated a malicious prosecution lawsuit against Fox Rothschild LLP filed by a business owner who accuses the firm of knowingly pursuing litigation under a contract it knew was forged.

The unanimous Nov. 16 opinion written by Justice Dorothy Kim overturned a decision by Los Angeles County Judge Huey P. Cotton Jr. “We infer malice from defendants’ lack of probable cause in continuing to prosecute an action they knew was initiated based on a forged signature,” she wrote.

In an August 2021 order, Cotton granted a motion to strike and an anti-SLAPP motion, and awarded $225,000 in attorneys in favor of Fox Rothschild LLP. Justices Laurence Rubin and Lamar Baker concurred.

The appellate panel decision reinstates the lawsuit by plaintiff Reuven Justin Cypers. He accuses Fox Rothschild of knowingly representing his former business partner, Joseph R. Granatelli, in a declaratory action Granatelli filed against Cypers in 2017. Cypers claims that Granatelli filed the lawsuit as part of his exit strategy to terminate their partnership as co-owners in the payment processing company Impact Merchant Solutions Inc.

According to Cypers, in that 2017 complaint, Granatelli attached a copy of a contract he forged “concerning a partnership between Cypers and Granatelli, the formation of Impact, and Granatelli’s compensation.”

According to the appellate opinion, Granatelli pleaded no contest to felony identity theft stemming from Cypers claim of forgery in January 2019.

In the trial court order from the malicious prosecution action Cotton found that the firm’s continued pursuit of the litigation on behalf of Granatelli, despite Cypers’ claims, was not unreasonable. He wrote that it is “quite common in representing clients that an attorney would take his own client’s word over the representations of the other side.”

Attorneys for neither party responded to requests for comment Monday. Cypers et al. v. Fox Rothschild LLP et al., B316675 (Cal. App. 2nd. Filed Nov. 2, 2021).

Cypers was represented by Kenneth J. Catanzarite and Brandon E. Woodward of Catanzarite Law Corp. Fox Rothschild was represented by Michael P. McNamara, Alexander M. Smith, and Vivian L. Bickford, of Jennifer Block LLP; and Wesley M. Griffith of Tycko & Zavareei LLP.

In the opinion, Kim addressed the argument on appeal from Cypers’ attorneys that Cotton should have stayed or abated their lawsuit against Fox Rothschild instead of issuing a ruling on the anti-SLAPP motion.

“Accordingly, plaintiffs made a prima facie showing that defendants lacked probable cause in continuing to prosecute the underlying action after learning that the putative contract upon which it was based had been forged,” Kim wrote.