Hufstedler, Kaus & Ettinger v. Superior Court

The issue in this malicious prosecution action is whether the extent of the defendant-attorney’s knowledge at the time the underlying lawsuit was filed is always relevant to the determination of probable cause. For the reasons explained below, we hold that it is not.

The Underlying Action

College Savings Bank offers its investors certificates of deposit designed for parents who want to prepay their children’s college education (College-Sure Certificates of Deposit). In the Spring of 1991, the Bank embarked on an advertising campaign to publicize its CDs as superior to tax-exempt zero coupon bonds for saving for future college costs. One advertisement, headed “Zero Coupon Bonds: The Wrong Choice for College Savers,” triggered this litigation. Zane B. Mann, the publisher of and principal writer for the California Municipal Bond Adviser (a monthly financial newsletter which, as its name suggests, comments on municipal bonds available in California), saw the Bank’s advertisement in Forbes Magazine, and requested and received the standard investment information packet. On October 1, 1991, Mann wrote (and the California Municipal Bond Adviser published) an article which,…