Quote Quoting gonzodude
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, we would like to counter sue for our legal fees, lost wages, lost business, and travel expenses.

1) How and when can we, as in all three parties named as defendants, file a counter claim or suit against the plaintiff? Or, is it too late at this stage?
That's not how it works. You don't countersue for damages. You file a motion for sanctions under Section 128.7 of the California Code of Civil Procedure, alleging that the plaintiff filed a meritless and frivolous lawsuit:

http://leginfo.legislature.ca.gov/fa...r=6.&article=2.

Unfortunately, you don't get awarded sanctions just because you win. You have to prove that the plaintiff file the lawsuit knowing that it was meritless and did it for the sole purpose of harassing and extorting money from the defendants.

Being wrong and losing the case is not the criteria for those sanctions. I don't think you will be successful if you tried it.