Wright

Frank C. Wright sued Phyllis Ripley and Fire Insurance Exchange (Fire) for malicious prosecution. Defendants moved for judgment on the pleadings on the basis of collateral estoppel. They contended the issue of “malice” had been conclusively determined in their favor in the underlying proceeding because Wright’s motion for sanctions under Code of Civil Procedure section 128.5 was denied on the ground that “bad faith” was not established. The trial court agreed and granted the motion. We conclude that issues resolved on a routine sanction motion are not entitled to preclusive effect in a later action for malicious prosecution and therefore reverse the judgment.

This case has a tortuous history, which is recounted in detail in the briefs. For our purposes, it is sufficient to explain that Ripley was sued in a personal injury case and hired Wright to defend her. Ripley’s defense was tendered to Fire, her insurer under a homeowners policy, but there was some delay before Fire agreed to undertake Ripley’s defense and pay Wright to act as Cumis counsel (San Diego Federal Credit Union v. Cumis Ins. Society, Inc. (1984) 162 Cal.App.3d 358 [ 208 Cal.Rptr. 494 , 50 A.L.R.4th 913…