Background
Wayne and Janet Gretzky filed a first amended malicious prosecution complaint on March 27, 2025 against attorney Adam Grant, the Grant|Shenon law firm, and clients Veera Mahajan and Howard Feldman. The complaint concerned fraud litigation brought against the Gretzkys over BuChew, LLC, a company formed to market weight-loss chewing gum. The Gretzkys alleged that the fraud suits were part of a scheme to pressure them into paying millions of dollars to settle. They relied in part on a company memorandum quoting investor Roger Gunn's account of Steven Sparks discussing a lawsuit for tens of millions of dollars that might produce a settlement of a few million.
The Feldman and Mahajan fraud cases encountered repeated successful demurrers. Mahajan's case was voluntarily dismissed without prejudice shortly before a hearing on an unopposed demurrer, while Feldman dismissed his case with prejudice after multiple demurrers were sustained with leave to amend. The Gretzkys then brought the malicious prosecution action. Grant responded with an anti-SLAPP motion, arguing among other things that he had adequately investigated the fraud claims and acted without malice. Los Angeles County Superior Court Judge Jerrold Abeles denied the motion, and Grant appealed.
The Court’s Holding
The Court of Appeal reviewed the denial de novo and affirmed. Protected activity was undisputed, so the case turned on whether the Gretzkys' claim had minimal merit. The court held that the favorable-termination issue was forfeited because Grant had not disputed it below, but concluded that he would lose anyway. Repeated failures to plead fraud adequately, the absence of opposition to Mahajan's final demurrer, the timing of the dismissals, and Feldman's dismissal with prejudice supported termination on the merits rather than for technical or procedural reasons. The court applied the presumption that a voluntary dismissal is a favorable termination on the merits, and separately noted that courts make inferences for the plaintiff on the second prong of anti-SLAPP motions.
On probable cause, the court examined the facts Grant actually possessed rather than imposing a freestanding duty to investigate. It found some support for alleging falsity and knowledge of falsity, but no adequate basis for alleging that Gretzky made or authorized the investor-deck statements, intended to induce Feldman and Mahajan to invest, or caused their reliance. Nor did Grant identify evidence connecting the statements' alleged falsity to BuChew's collapse and the lost investments. The court cautioned that sustained demurrers and unrelated discipline against predecessor counsel did not themselves establish a lack of probable cause.
The court separately found minimally sufficient circumstantial evidence of malice: the lack of probable cause on multiple fraud elements, Grant's limited investigation, evidence that he did not interview his clients about the merits, his apparent disregard of the described settlement-pressure plan, and the absence of a response to correspondence calling the cases frivolous. It rejected privilege as a reason to grant the anti-SLAPP motion. Unlike the authorities Grant cited, the Gretzkys were not his former clients using privilege to prevent his defense, and no client refusal to waive privilege had been established. Grant had not pursued the required four-factor analysis or evidentiary hearing, and the court said that inquiry did not fit this early minimal-merit review.
Key Takeaways
- A voluntary dismissal can support favorable termination when repeated merits-based pleading failures and the circumstances of dismissal indicate abandonment of an ineffective fraud claim.
- The probable-cause inquiry focuses on evidence the attorney actually possessed, while the extent of an attorney's investigation may still bear on malice.
- The court found minimal merit in the malicious prosecution claim without deciding that Grant ultimately committed the tort.
- Attorney-client privilege did not justify striking the claim where no client refusal to waive was shown and Grant had not pursued the required evidentiary analysis.
- The order denying Grant's anti-SLAPP motion was affirmed, and costs on appeal were awarded to the Gretzkys.
Why It Matters
The decision allows the malicious prosecution case to proceed past the anti-SLAPP stage; it is not a final determination of liability. It distinguishes the evidence needed for probable cause from circumstantial evidence relevant to malice and explains why repeated unsuccessful amendments can help establish favorable termination.
The privilege discussion leaves open whether privilege might ultimately restrict or block the claim after the required factual inquiry. The court also expressly declined to decide whether favorable termination depends on subjective dismissal reasons or objectively verifiable circumstances because that issue had not been briefed.
Read the full opinion (PDF) · Court docket