Facts

The complaint alleged a single cause of action for malicious prosecution against defendant James A. Kay, his counsel in the underlying action, Jeffrey Cohen, and Cohen's law firm, Pavone & Cohen.

The underlying case giving rise to the malicious prosecution concerned an August 2000 accident in which Mario Pena was injured following a gas explosion at Oceana de Rosarito condomimium complex (Oceana) located in Baja California, Mexico. Mr. Pena brought suit to recover damages for his injuries against defendant Homer "Red" Farris, a unit owner who allegedly directed Pena to light a gas broiler that ignited. This case was entitled Mario Pena v. Homer Farris, et al., filed in Riverside County Superior Court.

On May 8, 2002, defendant Farris filed his cross-complaint for indemnity naming defendant Kay as a cross-defendant. In answering the cross-complaint, Kay filed his own cross-complaint (cross-cross-complaint) for indemnity against certain cross-defendants, some of whom became plaintiffs in the instant action.

Summary judgment motions were filed by cross-defendants in the Pena matter and opposed. These motions were granted. Certain cross-defendants in the Pena matter filed the instant malicious prosecution action.

PLAINTIFFS' CONTENTIONS:
According to plaintiff's counsel, Kay cross-complained against eight other individuals who were not connected to the workers, the fire, or the furnace; these individuals were not in Mexico at the time of the fire. In his defense, Kay asserted the "advise of counsel" argument. In doing so, Kay waived the attorney-client privilege. Additionally, the California Supreme Court had expanded the tort of malicious prosecution to include maintaining a malicious action. Thus, the trial court ordered Kay to turn over all communications between Kay and the several lawyers who were giving him advise in the underlying action.

Plaintiffs claimed that Kay did not tell Cohen, Kay's attorney, that the plaintiffs were part of a faction that opposed Kay. Plaintiffs' counsel claimed that Cohen specifically told Kay not to select names on the basis of an alignment to a faction, which is what Kay did; that Kay did not tell his lawyer about it and further failed to tell the lawyer many other material and important information, which plaintiffs claimed were 13 pending lawsuits against them.

Each plaintiff testified that they were essentially forced out of their beachfront condominiums. Two of the plaintiffs, who owned their property for over 15 years, sold their units. Two others claimed to have not used their units in several years. One other claimed to sneak into the complex to avoid any contact with others.

DEFENDANTS' CONTENTIONS:
Kay disputed plaintiffs' contentions and argued that he was following the direction of his counsel as best as he could. Kay's attorney, defendant Jeffery Cohen, suggested he file this cross-cross-complaint and he selected Homer Farris as the first cross-cross-defendant. Cohen provided vague directions to Kay and Kay's general counsel, Laurence Feinberg, as to how to select additional defendants. Officers, directors, fellow condominium homeowners, or those "similarly situated" were requested as potential cross-cross-defendants. Cohen admitted at trial that the instructions as to how to select the defendants were vague and subject to interpretation. Kay's cross-cross-complaint was filed with no known facts to establish any direct liability against any of the cross-defendants. Kay believed that liability might flow from the cross-defendants' status as either board officers or as members of the budget, finance, and facility committees.

Kay claimed he was unaware of any contentions plaintiffs' counsel made to his former attorney that the cross-cross-complaint was unfounded. Kay stated that he had prior litigation history with only two of the plaintiffs. He argued that the lawsuits filed by the Ocean homeowners association against the two plaintiffs were a board decision and not his personal decision.

Settlement Discussions

Plaintiffs indicated a willingness to settle at $500,000 each or $2.5 million total. Defendant offered two C.C.P. 998 offers one month before trial, each in the amount of $15,000.

Damages

Phase I damages: $10,207 each in economic damages and $250,000 each for non-economic for a total of $1.3 million. Phase II punitives: $1,040,828 for each plaintiff for a total of $5.2 million.

Result

Verdict for $6,505,000 or $1.3 million for each plaintiff. Jeffrey Cohen, Pavone and Cohen settled for $65,000 total with a good faith finding, which was apportioned as $13,000 to each plaintiff after trial. Kay filed a 998 offer of $70,000 or $14,000 each. Each plaintiff was charged approximately $10,200 for the purpose of defending the cross-cross-complaint. The jury awarded each plaintiff their attorney's fees for the cross-cross-complaint. Additionally, the jury awarded each plaintiff $250,000 in non-economic damages and punitive damages to each plaintiff in the amount of $1,040,828. Defendant Kay intends to move for a new trial and appeal the jury verdict.

Other Information

Kay filed 40 motions in limine and took four writs with additional petition for review at the Supreme Court. All the writs were denied. On Sept. 25, 2008, the defendant's motion for new trial/remittitur was denied. FILING DATE: April 10, 2006.

Deliberation

2.5 hours (Phase I), two hours (Phase II)

Poll

Phase I: 12-0 (liability and damages), 12-0 (malice), 9-3 (oppression). Phase II: 12-0 (that Kay should be assessed punitive damages), 10-2 (to assess punitive damages against Kay)

Length

11 days