Young v. Motor City Apartments Limited Dividend Housing Ass'n No 1 & No 2 , 133 Mich. App. 671 ( 1984 )

133 Mich. App. 671 (1984) 350 N.W.2d 790

YOUNG
v.
MOTOR CITY APARTMENTS LIMITED DIVIDEND HOUSING ASSOCIATION NO 1 & NO 2

Docket No. 67744.

Michigan Court of Appeals.

Decided April 16, 1984.

Patmon & Young, P.C. (by Quincy D. Evans), for Hallison H. Young and Patmon, Young & Kirk, P.C.

Collins, Einhorn & Farrell, P.C. (by Brian Einhorn and Noreen L. Slank), for Harry S. Ellman and Tilchin & Ellman.

Before: MacKENZIE, P.J., and WAHLS and M. WARSHAWSKY,^[*] JJ.

WAHLS, J.

Plaintiffs appeal from an order of summary judgment granted in favor of defendants Harry S. Ellman and Tilchin & Ellman. Plaintiffs sought damages from the defendants for malicious prosecution and for abuse of process. Defendants are former clients of the plaintiffs, and those clients' attorneys who initiated a lawsuit against the present plaintiffs alleging various acts of legal malpractice, fraud and misrepresentation. In a jury trial, a verdict of no cause of action was rendered. Thereafter, the plaintiffs instituted this lawsuit. The defendants moved for summary judgment based upon GCR 1963, 117.2(1), which provides for summary judgment when the opposing party has failed to state a claim upon which relief can be granted. The trial judge granted the motion holding that plaintiffs' original and amended complaints failed to plead special injury as to the malicious prosecution claim and also failed to allege an improper use of process to support the abuse of process claim.

On appeal, plaintiffs present three allegations of error:

1. The trial court erred in granting summary judgment as to the claim of malicious prosecution on the basis that plaintiffs had failed to allege special injury;

2. The trial court erred in granting summary judgment as to the claim of abuse of process on the basis that plaintiffs failed to plead an improper use of process; and

3. The trial court erred in granting summary judgment as to both claims when there existed material factual issues as to the state of mind of the defendants.

I

Plaintiffs argue that the claim of malicious prosecution was properly pled and that the guidelines for alleging special injury were met therein. Defendants disagree with this assertion and argue that the plaintiffs must show an interference with person and property that is the equivalent of a taking. Defendants argue that the plaintiffs' allegations fall short of the standard set forth in Friedman v Dozorc, 412 Mich. 1; 312 NW2d 585 (1981).

On review, we first note that a motion grounded on GCR 1963, 117.2(1) challenges the legal sufficiency of a claim. All well-pled allegations and reasonable conclusions from the pleadings are accepted as true. Bielski v Wolverine Ins Co, 379 Mich. 280, 283; 150 NW2d 788 (1967); Crowther v Ross Chemical & Mfg Co, 42 Mich. App. 426; 202 NW2d 577 (1972). On appellate review, the test is whether the plaintiffs' claim is so clearly unenforceable as a matter of law that no factual development can justify a right to recovery. Rubino v Sterling Heights, 94 Mich. App. 494, 497; 290 NW2d 43 (1979).

The elements of a tort action for malicious prosecution of a civil proceeding are the following:

1. Prior proceedings terminated in favor of the present plaintiff;

2. Absence of probable cause for those proceedings;

3. Malice, defined as a purpose other than that of securing the proper adjudication of the claim; and

4. A special injury that flows directly from the prior proceedings.

Friedman, supra, p 48.

In the present case, the trial court relied upon the holding of the Supreme Court in Friedman and concluded that plaintiffs had failed to allege special injury.

In Friedman, the plaintiff physician instituted an action against the attorneys who had represented clients in a medical malpractice action that resulted in a no cause of action verdict. Dr. Friedman alleged malicious prosecution, abuse of process, negligence and legal malpractice. The Supreme Court upheld the summary judgment which dismissed all aspects of the plaintiffs' complaint. As to the plaintiffs' malicious prosecution claim, the Court held that Michigan would continue to follow the so-called "English rule" and require a plaintiff to show special injury in order to maintain the action. 412 Mich. 34. The Court reasoned that it would be unwise to arm all defendants who prevail in a prior action with an instrument of retaliation:

"[Most] defendants, react to a lawsuit with hurt feelings and outrage. They may impute malicious motives to the plaintiff and the opposing attorney and be eager to exact retribution if they prevail.

* * *

"There are sure to be those who would use the courts and such an expanded tort remedy as a retaliatory or punitive device." Friedman, supra, pp 45-46.

The Court did not determine the precise boundaries of the term "special injury", but cited with approval prior cases in which the special injury alleged was the seizure of property or a result equivalent to a seizure of property.^[1] 412 Mich. 39-41.

In the present case, plaintiffs allege the following injuries:

1. Time and revenue lost while defending the lawsuit;

2. Medical expenses for treatment of various illnesses and mental anguish related to defending the lawsuit;

3. Public ridicule;

4. Injury to reputation and goodwill, both private and professional;

5. Costs incurred to defend against the lawsuit and to defend against grievances brought before the State Bar;

6. Lost profits from accounts receivables that became uncollectable while defending the lawsuit; and

7. Lost profits from the closing of a section of plaintiffs' business materially affected by the lawsuit.

We find that plaintiffs' claims do not differ substantially from the claims of the physician in Friedman, and fall short of being equivalent to a seizure of property. Interference with one's usual business and trade, including the loss of goodwill, profits, business opportunities and the loss of reputation, is not cognizable as special injuries. The reasoning of Judge (now Justice) BOYLE in Sage International, Ltd v Cadillac Gage Co, 556 F Supp 381, 386 (ED Mich, 1982), on this issue is instructive:

"The allegations that a suit was brought solely to ``ruin' someone's business or reputation is an exceedingly subjective assertion which any litigant could pose and which could be verified or disproven only upon a trial of the issue * * *. It is presumably for this reason that courts recognizing the special injury prerequisite demand that some ``objective' equivalent of a taking be alleged or, as in [Chrysler Corp v Fedders Corp, 540 F Supp 706 (SD NY, 1982)], that some ``provisional remedy' is alleged to have been utilized against plaintiff. Without such criterion, the stringent special injury rule, which the Friedman court has so carefully engrafted upon this cause of action, could be swallowed up by an allegation that the defendant ``was out to ruin me.' I do not believe that this was a result intended by the court in Friedman."

This Court concurs in Justice BOYLE'S belief and we conclude that plaintiffs in the present case have failed to state a claim for malicious prosecution by failing to allege special injury sufficiently. See also Chrysler Corp v Fedders Corp, 540 F Supp 706, 723-724 (SD NY, 1982).^[2]

II

Plaintiffs also argue that the trial court erred in granting summary judgment as to the abuse of process claim. Plaintiffs contend that their complaint alleges an improper use of process by the defendants sufficient to maintain the action.

To recover upon a theory of abuse of process, a party must plead and prove an ulterior purpose and an act in the use of process that is improper in the regular prosecution of the proceeding. Spear v Pendill, 164 Mich. 620, 623; 130 N.W. 343 (1911); Friedman, supra, p 30. In Friedman, the Supreme Court held that a plaintiff who alleges no more than that a party has commenced action against him has not pled an improper use of process. The pleadings must allege an irregular act in the use of process. Friedman, supra, pp 30-31.

In the present case, plaintiffs allege that defendants intended to use the action for the following motives:

"1. To coerce and extort payment from [plaintiffs] and their malpractice insurance carrier of the frivolous claims made * * * in the prior action;

"2. To coerce and extort a refund of fees from [plaintiffs] to which they were not entitled;

"3. To attempt to coerce [plaintiffs] to pay the alleged ``third-party creditor beneficiaries' claims asserted against [plaintiffs] in the prior action; and

"4. To attempt to force [plaintiffs] to give up and not prosecute their defenses and claims for attorney fees in the prior action."

Defendants respond that the plaintiffs' claim is deficient because discovery tactics do not of themselves amount to an abuse of process.

Plaintiffs rely on Three Lakes Ass'n v Whiting, 75 Mich. App. 564; 255 NW2d 686 (1977), to support the position that oppressive discovery and trial tactics are an abuse of process. In Three Lakes, plaintiffs brought an action which included a claim of abuse of process against defendants who had instituted a prior action in which they sought damages for allegedly tortious actions by the plaintiffs in obstructing a condominium project. This Court held that plaintiffs stated a proper claim for abuse of process by alleging the following ulterior purpose:

"[Defendants] instituted the action for damages for the malicious and ulterior purpose of causing plaintiff so much expense and trouble in defending it that plaintiff would be forced to give up or at least be frustrated in pursuing its legitimate activities in opposition to defendants' condominium project." Three Lakes, supra, p 570.

The alleged improper acts included the following:

"[D]efendants have abused the discovery process by burdening plaintiff with requests for discovery while at the same time causing delays in complying with legitimate discovery procedures of plaintiff, that defendants at one point agreed to settle the case and subsequently refused to comply with that agreement, and that defendants have conducted that lawsuit in an oppressive manner in various other ways.

"It is also claimed that defendants have stated that they would dismiss Action 926 without receiving any damages if plaintiff would agree not to express opposition to or otherwise oppose defendants' proposed condominium project." Three Lakes, supra, p 570.

This Court held that the specific improper use of process was defendants' settlement offer to dismiss the action in return for plaintiff's capitulation in its opposition to defendants' condominium project and found this purpose to be ulterior and collateral to the action brought against the plaintiff:

"[The] offer was premised on plaintiff ending all opposition to the project, be it proper or tortious, and may be viewed on this motion for summary judgment as a use of Action 926 as a club to obtain a purpose collateral to its proper purpose." Three Lakes, supra, p 574. (Emphasis in original.)

After Three Lakes, this Court has not examined the question of what constitutes a proper claim for abuse of process, particularly in light of Friedman. In doing so, we find that the present case is distinguishable factually from Three Lakes, and cannot withstand the scrutiny of the Friedman precedent.

The Supreme Court in Friedman reasoned that to make a proper claim for abuse of process the pleadings must allege an irregular act in the use of process. An allegation which claims no more than the proper issuance of process, notwithstanding improper motives in causing such process to issue, fails to satisfy the requirements of Spear, supra. See also Friedman, supra, pp 30-31.

In Three Lakes, this Court found that the defendants attempted to attain a collateral objective outside of the use of the process, inter alia, to coerce plaintiffs to end all opposition to defendants' condominium project. Three Lakes, supra, p 574. The ostensible objective in the action (money damages for plaintiffs' alleged tortious conduct) was found to be of secondary importance, a fact illustrated by the defendant's conduct in settlement negotiations. This Court did not hold that allegedly oppressive discovery and trial tactics standing alone would provide the basis for an abuse of process claim, and we are not prepared to so hold on the facts now before us.

We hold, consistently we feel with Friedman, that a plaintiff making out a claim for abuse of process must allege a use of process for a purpose outside of the intended purpose and must allege with specificity an act which itself corroborates the ulterior motive. Friedman, supra, p 31, Three Lakes, supra, pp 573-574, and Sage International, supra, p 389.

In the present case, plaintiffs have not alleged any improper use of process designed to obtain a collateral advantage. Each purpose set forth in their amended complaint describes nothing more than objectives commonly sought by claimants who initiate lawsuits, inter alia, to prevail over the defenses and counterclaims of the opposing party and obtain a judgment authorizing appropriate damages. The acts set forth in plaintiffs' amended complaint depict nothing inconsistent with the zealous representation of claims that is inherent in our adversary system and which is properly governed by the Michigan court rules. Moreover, the record does not reveal any act by the defendants outside of the formal use of process to extort or otherwise oppress plaintiffs. See Three Lakes, supra, p 573. Friedman, supra, p 31.

Two recent federal decisions which analyze abuse of process claims in light of Friedman support our holding. In Chrysler Corp v Fedders Corp, supra, the court rejected an abuse of process claim based upon a prior action which the plaintiff alleged was brought to "harass and defame [it], to impose excessive litigation costs * * * and to coerce [it] into relinquishing its legitimate contract rights." 540 F Supp 726-727:

"It is not enough that the actor have an ulterior motive in using the process of the court. It must further appear that he did something in the use of the process outside of the purpose for which it was intended. * * * Every one has a right to use the machinery of the law, and bad motive does not defeat that right. There must be a further act done outside the use of process — a perversion of the process. If he uses the process of the court for its proper purpose, though there is malice in his heart, there is no abuse of the process." Chrysler Corp, supra, p 725. Quoting from Hauser v Bartow, 273 NY 370, 374; 7 NE2d 268 (1937). (Citations omitted.)

Similarly, in Sage International, supra, the court rejected a claim for abuse of process grounded on the alleged purpose, inter alia, of coercing the plaintiffs to discontinue their business. The court reasoned that the plaintiffs failed to specifically allege an act in the course of process that demonstrated an ulterior purpose. Sage International, supra, p 389.

Accordingly, this Court holds that process which properly issues and that prompts the case toward the resolution of the claims therein is not an abuse of process absent allegations of a specific act in the course of process that reveals a collateral, ulterior purpose. In the present case, the trial court properly rendered summary judgment in favor of defendants.

III

Plaintiffs finally argue that the trial court erred in granting summary judgment on both issues because there existed material issues of fact concerning the defendants' state of mind and intentions in initiating the prior lawsuit. We find no error here; the plaintiffs' failure to properly state both claims renders the factual disputes therein immaterial, Friedman, supra, p 32.

Affirmed.

NOTES

[*] Circuit judge, sitting on the Court of Appeals by assignment.

[1] Pawlowski v Jenks, 115 Mich. 275; 73 N.W. 238 (1897); Powers v Houghton, 159 Mich. 372; 123 N.W. 1108 (1909); Krzyszke v Kamin, 163 Mich. 290; 128 N.W. 190 (1910); Tomkovich v Mistevich, 222 Mich. 425; 192 N.W. 639 (1923); Scovera v Armbruster, 257 Mich. 340; 241 N.W. 231 (1932); Fisk v Powell, 349 Mich. 604; 84 NW2d 736 (1957); Leeseberg v Builders Plumbing Supply Co, 6 Mich. App. 321; 149 NW2d 263 (1967), and Rowbotham v Detroit Automobile Inter-Ins Exchange, 69 Mich. App. 142; 244 NW2d 389 (1976).

[2] See also Barnard v Hartman, 130 Mich. App. 692; 344 NW2d 53 (1983). There this Court rejected a claim for malicious prosecution grounded on alleged damage to plaintiff's professional reputation.