California Case Law 2025: Peterson v. Zhang, View Dispute

Quick Answer

Peterson v. Zhang (Cal. Ct. App., 2d Dist., Div. 8, No. B334987) arose from a homeowners association's tree-view dispute program. An owner sued the association's independent mediator for breach of fiduciary duty on the theory that the mediator was an association director or officer. The mediator won, then sued the owner for malicious prosecution. On December 8, 2025 the Court of Appeal affirmed the denial of the owner's anti-SLAPP motion, holding that the earlier denial of a discretionary sanctions motion did not trigger the "interim adverse judgment rule." The case matters to associations mainly because it separates directors and officers, who owe fiduciary duties, from independent contractors who do not.

At a Glance

The Dispute

Charles Peterson and Jinshu Zhang are lawyers and homeowners in Palos Verdes Estates and both belong to the Palos Verdes Homes Association. The association has a mediation and arbitration procedure for tree disputes between neighbors. It retained Peterson, who owned a mediation firm, as a mediator on an as-needed basis. If mediation failed, the mediator arbitrated, and owners could appeal the result to the association's board.

Zhang submitted a view restoration application in 2013 and another in July 2017 claiming a neighbor's pine tree blocked his view. In 2017 Peterson met with both neighbors. The tree's owner agreed to trim but not to remove the whole branch. Zhang refused and told Peterson that if no award favored him, he would sue Peterson, the board and the neighbor. Peterson told the association's general counsel he planned to deny the application on several grounds. The general counsel decided the association would not proceed, writing that the neighbor's property did not adjoin Zhang's.

Zhang sued the association, its general counsel and Peterson in 2017. His claim against Peterson was breach of fiduciary duty, and it depended on Zhang's allegation that Peterson was a director and officer of the association. Peterson was not. He said so under oath in his February 2018 anti-SLAPP motion, and the association's general counsel also testified Peterson was not a director, officer or employee. In January 2019 the association and its general counsel settled with Zhang for $35,000 and agreed to rehear his application, but Peterson did not settle.

Peterson then moved for sanctions under Code of Civil Procedure section 128.7, which the trial court denied in July 2020 in a one-sentence order. At a jury trial in August 2021, the court granted Peterson a nonsuit after Zhang's opening statement and entered judgment for Peterson. Zhang did not appeal. In November 2022 Peterson sued Zhang for malicious prosecution.

What the Court Held

Procedural posture

Zhang filed a special motion to strike the malicious prosecution suit under the anti-SLAPP statute (Code of Civil Procedure section 425.16). The parties agreed the first prong was met, so the question was whether Peterson showed his claim had at least minimal merit. The trial court said yes in a 15-page ruling, and Zhang appealed. The Court of Appeal affirmed the denial and remanded.

The interim adverse judgment rule

Zhang's main argument was that because he had defeated Peterson's sanctions motion, the interim adverse judgment rule established probable cause as a matter of law. That rule treats a trial-court judgment or verdict for the plaintiff in the underlying case as establishing probable cause even if later reversed, and it has been extended to defense summary judgment denials and similar pretrial rulings. The court held it does not extend to the denial of a discretionary sanctions motion under section 128.7. A denial can rest on reasons unrelated to the merits, the order here gave no explanation, and it did not culminate in a judgment for Zhang, since the only judgment was Peterson's. The court relied on Wright v. Ripley (1998) 65 Cal.App.4th 1189.

Probable cause and purpose

The court found Peterson made a prima facie showing that no reasonable person in Zhang's position would have kept suing once Peterson and the association's general counsel gave direct evidence that Peterson was not a director or officer. Zhang's evidence (association letterhead, Peterson's fee agreement and 1099 forms, his attendance at open board meetings, and a website listing under "Faces of" the association) did not show a director or officer role. The website, in fact, described Peterson as the association's "View Dispute Arbitrator/Mediator." The court said that once refuting evidence arrived, Zhang had a duty to investigate, for instance by asking the board president.

On the fourth element, acting for a purpose other than winning, the court said the trier of fact can infer it when a party keeps prosecuting after learning the claim lacks probable cause. It treated Zhang's continued pursuit as reckless disregard of a substantial and unjustifiable risk that the claim was baseless. The court also said the association's $35,000 settlement proved nothing about the claim against Peterson, who did not settle.

Why It Matters for Associations

The opinion does not decide any Davis-Stirling issue. It is a malicious prosecution and anti-SLAPP case that happens to arise from association dispute resolution. Even so, three points are useful to boards.

• The opinion repeats that directors of homeowner associations owe members a fiduciary duty (citing Coley v. Eskaton (2020) 51 Cal.App.5th 943). The suit against the mediator failed because he was not a director or officer.
• Clear role labels matter. The litigation turned partly on how an independent contractor appeared on letterhead, in a retainer agreement and on the association's website.
• Mediators, arbitrators and similar vendors who work for an association can find themselves sued by owners. Whether that exposes the association to cost, for example through indemnity terms in a vendor contract, was not addressed by the court.

Our reading is that boards should treat the case as a prompt to review how dispute-resolution programs describe their neutrals, not as guidance on whether any particular owner suit has merit.

Related California Law

• California HOA case law: Nahrstedt, Lamden, Dolan-King.
• Cocoa AJ Holdings v. Schneider, another 2025 anti-SLAPP decision tied to a condominium association.
• California HOA board meeting requirements.
• All published California HOA decisions of 2025 and 2026.

Board Checklist

• List every person who serves the association in a dispute-resolution role and note whether each is a director, officer, employee or contractor.
• Make sure retainer agreements, websites and letterhead describe contractors accurately.
• Keep dispute-resolution procedures in writing, including who decides and how owners can appeal to the board.
• Review indemnity and insurance terms in mediator and arbitrator agreements with counsel.
• Route owner threats of suit against vendors to the association's attorney promptly.

Frequently Asked Questions

Was this a Davis-Stirling Act case?

Not directly. It is a malicious prosecution case from a dispute that began in a homeowners association's tree-view program.

Is a mediator hired by an association a fiduciary of the owners?

The opinion says the fiduciary claim against Peterson depended on his being a director or officer. The court cited authority that directors of homeowner associations owe members a fiduciary duty, and it found evidence he was an independent contractor.

What is the interim adverse judgment rule?

It says a judgment or verdict for the plaintiff in the underlying case establishes probable cause for that case, even if later overturned. The court declined to extend it to a denied sanctions motion.

Did the court decide that Zhang committed malicious prosecution?

No. It held only that Peterson showed enough merit to defeat the anti-SLAPP motion, and it remanded for further proceedings.

Did the association's settlement matter?

The court said a settlement with other defendants cannot prove a fact about a defendant who did not settle.

Was the opinion published?

Yes. The filed opinion is marked certified for publication and is dated December 8, 2025.

Where This Comes From

We read the full filed opinion in Peterson v. Zhang (No. B334987, filed December 8, 2025) as posted on a public case-law mirror. We did not verify a Cal.App.5th citation, so none is given. Case descriptions come from the opinion text.

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Legal disclaimer: This article is general information, not legal advice. Laws change and associations differ. Confirm the current statute text and how it applies to your governing documents with a licensed California attorney before acting.