Three clients (clients) of the law firm Albert & Oliker (A&O) (defendant) agreed to sell an apartment building to Sheldon Appel Company (Sheldon) (plaintiff). Under the sales agreement, the clients would receive cash from the sale of the building and a percentage of proceeds from the sales of the individual condominiums (condos). The clients later learned that Sheldon was offering to sell the entire building. The clients consulted A&O and filed a complaint against Sheldon, seeking a declaration of rights and an equitable lien on the property. A&O recorded a lis pendens on the property on behalf of the clients. Sheldon moved to expunge the notice of lis pendens. The trial court granted the motion and dismissed the complaint. Sheldon later abandoned its plan to sell the building and instead began to sell the individual condos. A&O filed a new action on behalf of the clients, seeking damages for breach of contract. Sheldon filed a cross-complaint for malicious prosecution, alleging that A&O had asserted an untenable lien claim and recorded an impermissible lis pendens. The trial court severed the breach-of-contract claim from the malicious-prosecution claim. The trial court submitted the issue of probable cause on the malicious-prosecution claim to the jury. A&O won the breach-of-contract claim and obtained a $720,000 judgment. The jury in the malicious-prosecution case awarded Sheldon $82,000 in compensatory damages and $1 million in punitive damages. A&O appealed the award in the malicious-prosecution case, and the court of appeal affirmed. The state supreme court granted review.