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`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.
`
`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF CALIFORNIA
`
` Case No.: 3:19-cv-01185-H-BLM
`
`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.]
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`(4) GRANTING DEFENDANTS
`TYRELL AND SULLIVAN’S ANTI-
`SLAPP MOTION TO STRIKE; AND
`
`[Doc. No. 33.]
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`(5) DENYING DEFENDANTS
`ALTAMIRANO, HUFFMAN,
`KINNEY, AND TURNER’S MOTION
`FOR AN UNDERTAKING UNDER
`CAL. CIV. PROC. CODE § 1030
`
`[Doc. No. 28.]
`
`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
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`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
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`
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`In deciding the present motions, the Court takes judicial notice of the filings from the prior federal
`action and the state court actions submitted by the parties. See United States v. Black, 482 F.3d 1035,
`1041 (9th Cir. 2007) (A district court “‘may take notice of proceedings in other courts, both within and
`without the federal judicial system, if those proceedings have a direct relation to matters at issue.’”);
`Vasserman v. Henry Mayo Newhall Mem’l Hosp., 65 F. Supp. 3d 932, 942–43 (C.D. Cal. 2014) (“Court
`orders and filings are proper subjects of judicial notice.”); ScripsAmerica, Inc. v. Ironridge Glob. LLC,
`56 F. Supp. 3d 1121, 1136 (C.D. Cal. 2014) (“It is well established that federal courts may take judicial
`notice of related state court orders and proceedings.”).
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`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.)
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`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 F. App’x 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.
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`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.
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`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
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`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
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`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
`Defendants’ Rule 12(b)(6) Motions to Dismiss
`I.
`
`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
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`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.)
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`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
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`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).
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`“‘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;
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`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
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`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
`
`
`
`2
`The Court notes that Storix’s complaint, its first amended complaint, and its second amended
`complaint in the underlying state action all asserted a single cause of action for breach of fiduciary duty.
`(Doc. No. 34-2, RJN Exs. 8, 9, 11.)
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`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 F. App’x
`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 F.
`App’x 620, 622 (9th Cir. 2017); Law Offices of Bruce Altschuld v. Wilson, 632 F. App’x
`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
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`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
`Plaintiff’s Claim for Indemnification
`C.
`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
`
`
`
`3
`Defendants also argue that Plaintiff’s malicious prosecution claim should be dismissed because
`Plaintiff cannot plead the probable cause element of his claim; Plaintiff failed to adequately allege the
`malice element of his claim; and the claim is barred by the Rooker-Feldman doctrine. (Doc. No. 30-1 at
`6-7; Doc. No. 32-2 at 12-18; Doc. No. 57 at 4-5.) Because the Court dismisses Plaintiff’s malicious
`prosecution claim with prejudice for failure to satisfy the favorable termination element as a matter of
`law, the Court declines to address these additional grounds for dismissal.
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`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 pe