Gibson Dunn partners James Fogelman (left) and Jay Srinivasan.

Successful malicious prosecution suits are few and far between—as they should be. Lawyers need to feel free to advocate zealously without worrying about getting sued if they lose.

But a team from Gibson, Dunn & Crutcher got a green light last week to proceed in a malicious prosecution case against half a dozen lawyers in Southern California, including one who has counted entertainers such as Rod Stewart, Elton John, Bob Dylan, Nick Nolte and Sean Connery as clients.

The underlying case, which I first wrote about in 2016, is bonkers. Not so much the core dispute— Gibson Dunn's hedge fund client AEW Capital Management was sued for $12 billion by prominent Southern California developer Neil Shekhter and his company, NMS Capital Partners. The fight revolved around the terms of "buy/sell" provision in a real estate joint venture. Yawn, I know.

The crazy part is what happened when Gibson Dunn partners James Fogelman and Jay Srinivasan dug into the actual documents.

With the help of experts, they presented evidence that the hard drive of Shekhter's home computer was allegedly removed, replaced and loaded with backdated files; that a computer clock was turned back to manipulate metadata; that Adobe Acrobat software was used to change a key number in the contract from a 5 to a 3, that an old signature block was cut-and-pasted into a newly-created document.

Los Angeles County Superior Court Judge Suzanne Bruguera was persuaded, ruling in late 2016 that NMS "brought this case upon forged documents, committed perjury, and then intentionally and purposefully destroyed a wide swath of evidence relating to the forgeries."

She awarded AEW default judgment, pointing to NMS's "shocking, intentional, and pervasive" misconduct, adding that she had "no doubt" NMS was guilty of "widespread" forgery.

NMS appealed to California's Second District, which upheld the terminating sanctions. The California Supreme Court denied review last year and the judgment against NMS is now final.

At that point, Gibson Dunn's client could have walked away. After all, they won. 

Instead, they turned around and went after the lawyers for NMS—five partners at Los Angeles-based Miller Barondess including name partner Louis "Skip" Miller, who per his law firm bio has previously been selected as "The Best of the Bar" by the Los Angeles Business Journal and "Top 100 – California's Leading Lawyers" by the Los Angeles Daily Journal. He boasts a long list of celebrity clients, plus a wide range of municipal and commercial clients.

The AEW suit also names NMS counsel John Genga of Genga & Associates and Steven Zelig of Brentwood Legal Services.

"There was literally no evidence to support NMS' absurd allegations or its forgery, and there was overwhelming evidence to the contrary," Gibson Dunn's Fogelman wrote for AEW in the suit filed in Los Angeles federal court. "The NMS counsel defendants were in possession of irrefutable evidence of the falsity of the claims they pursued on NMS' behalf, yet they filed and pursued the action for years."

The Miller Barondess lawyers hit back with an anti-SLAPP motion to strike the complaint. 

"This lawsuit is a strategic maneuver to gain leverage in a long-standing real estate dispute by driving a wedge between a client and its lawyers. AEW is suing the Miller Firm for doing its job and for its legal work in representing a client in a hotly contested state court lawsuit," wrote Stephen Tully of Garrett & Tully on behalf of the Miller lawyers. 

But U.S. District Judge Andre Birotte Jr. declined to dismiss AEW's complaint, concluding in an 18-page decision that it satisfied the three necessary malicious prosecution elements.

First, Birotte determined that there was "no ambiguity" that the prior proceeding was terminated in AEW's favor. It wasn't just that AEW prevailed, but the termination related "to the merits of the action by reflecting either on the innocence of or lack of responsibility for the misconduct alleged."

Next, he found that NMS lawyers lacked probable cause for initiating the original lawsuit over the joint venture contract.

"The Miller defendants suggest the court should be 'loathe to second guess' the 'tactical and strategic decisions of counsel at trial," he wrote. "However, at this stage of the litigation, there does not appear to be any competent evidence that could have justified those trial decisions."

In a footnote, he added, "While the court recognizes the lawyer's role as a client's zealous advocate, viewing the evidence in plaintiff's light, the court struggles to see how defense counsel could have failed to see the futility of their lawsuit."

Finally, the judge found that AEW sufficiently pleaded malice. "The record demonstrates, among other things, that defendants engaged in heated litigation despite receiving ample indication that the documents underlying their claims were falsified; that there were discrepancies in the sworn statements provided by NMS; and that NMS engaged in 'shocking, intentional, and pervasive' evidence destruction."

In an email statement, Miller Barondess partner Sasha Frid wrote that "We believe Judge Birotte's decision is wrong and unfair because we had every right to advocate for our client. The court ignored established authority and overwhelming evidence we presented including decisions by two LA Superior Court judges who found that we did nothing wrong."

Frid continued, "Instead, the decision cited to the unsupported allegations in the complaint which is wrong as a matter of law on a SLAPP motion. We are going to take an appeal. With that said, this decision is a minor speed bump at an early stage of the proceedings. We did nothing wrong; and look forward to defeating this bogus and spiteful lawsuit before a California jury. Our firm is made up of conscientious, ethical lawyers who do excellent legal work for our clients." 

Zelig in an email also disagreed with Birotte's assessment. "We are unaware of any published opinion in the State of California that has held the lawyers responsible for a client's alleged spoliation in which the lawyers were not involved," he wrote. "We are confident that when the actual evidence is presented to the trier of fact that it too will conclude that the lawyers had absolutely no involvement whatsoever in the alleged spoliation."

Gibson Dunn's Fogelman sees it differently. "We are grateful for the court's ruling," he said. "This was not 'zealous advocacy;' this was an abuse of the judicial system in order to harass our client."