California: Malicious Prosecution Claim Denied Following Construction Defect Litigation

Owners of a home on San Fransisco’s historic Lombard Street hired a contractor, Thomas Lutge, to remodel their home. Due to the site conditions, this work required extensive excavation and underpinning prior to construction of a new basement foundation. All did not go as planned.

Following Lutge’s excavation, a geotechnical and structural engineering firm, Sure Engineers, Inc., investigated the work. Their conclusion: “Lutge’s work exceeded the work approved in the permit; the excavation was performed without notice to adjacent property owners; groundwater penetration on one side of the site could negatively affect the excavation area; vertical excavation and slot cuts into the retaining wall along the property line had insufficient lateral support; and excavation had gone below the existing brick footing for the structure.”

Although the findings were not deemed to impact life safety for the inhabitants, the homeowners were advised to avoid the area immediately above the excavation. The homeowners then filed construction defect claims against Lutge. Ultimately, Lutge won a defense verdict in that case. Normally, that would be the end of things – but not in this case:

Following a defense verdict in his favor in underlying construction defect litigation, contractor Thomas Lutge filed a malicious prosecution action against property owners Robert and Christine Adams, their attorneys (the law firm of McKague & Tong, attorney Daron Tong, and attorney Michele Miller, hereafter respondent attorneys), and their expert witness (Thomas Reeves and TR&A, Inc., hereafter Reeves) in that litigation. The respondent attorneys and Reeves brought special motions to strike appellant Lutge’s complaint for malicious prosecution and “aiding and abetting” malicious prosecution, respectively, pursuant to Code of Civil Procedure section 425.16. The trial court granted both motions and awarded attorney fees. On appeal, Lutge contends the special motions to strike were improperly granted and the attorney fees awards must be reversed. Finding no error, we will affirm.

Thanks to J. Kent Holland, Jr. at ConstructionRisk.com for highlighting this case.

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