Arcaro v. Silva & Silva Enterprises Corp

In Arcaro v. Silva & Silva Enterprises Corp. (1999) 77 Cal.App.4th 152, the Court found a collection agency lacked probable cause to file an action on a guarantee purportedly executed by Arcaro. When contacted by the collection agency, Arcaro told the agency that the signature on the guarantee was a forgery and provided handwriting samples and the name of the suspected forger. The collection agency instructed its attorneys to file suit anyway. (Id. at p. 155.) Arcaro prevailed in the underlying suit and successfully sued the collection agency for malicious prosecution. (Id. at pp. 158-159.) The outcome in Arcaro, supra, 77 Cal.App.4th 152, hinged on the fact the plaintiff in the underlying action was given specific information as to verifiable facts that, if true, would totally negate its cause of action. Normally, the adequacy of a prefiling investigation is not relevant to the determination of probable cause. In the unusual circumstances of Arcaro, the Court found the party had a duty to investigate further before filing suit. Notably, the collection agency's attorneys were not named as defendants in the malicious prosecution action; and Arcaro contains no hint that the attorneys lacked probable cause to file suit based on the facts known to them. To the contrary, Arcaro suggests the attorneys were entitled to rely on the genuineness of Arcaro's signature on the guarantee and had no duty to investigate before filing suit. (Arcaro, at pp. 158-159.)