Residents v. Diversified ( 1998 )

IN THE COURT OF APPEALS OF TENNESSEE
FILED
RESIDENTS AGAINST INDUSTRIAL ) C/A NO. 03A01-9703-CV-00102
LANDFILL EXPANSION, INC. (RAILE),) January 21, 1998
PERRY RUSSELL, DON BEAL, BETTY )
BEAL, GARY LONG and JUDY LONG, ) Cecil Crowson, Jr.
) Appellate C ourt Clerk
Plaintiffs, )
)
and )
)
DIANNA WILLIAMS, )
) APPEAL AS OF RIGHT FROM THE
Plaintiff-Appellant, ) McMINN COUNTY CIRCUIT COURT
)
)
)
v. )
)
)
)
DIVERSIFIED SYSTEMS, INC. and )
WILLIAM T. ALT, )
) HONORABLE JOHN B. HAGLER, JR.,
Defendants-Appellees. ) JUDGE
For Appellant For Appellee William T. Alt
GARY A. DAVIS ELIZABETH G. ALT
Knoxville, Tennessee Chattanooga, Tennessee
For Appellee Diversified
Systems, Inc.
NO APPEARANCE
O P I N IO N
VACATED AND REMANDED Susano, J.
1
The trial court granted the defendants, Diversified
Systems, Inc. (“Diversified”) and its attorney, William T. Alt
(“Alt”)1, summary judgment on the complaint for malicious
prosecution and abuse of process filed by the plaintiffs,
Residents Against Industrial Landfill Expansion, Inc. (“RAILE”)
and six individuals2 (collectively, “the plaintiffs”). Dianna
Williams (“Williams”) is the only plaintiff who has appealed.
She presents the following questions for our review:
1. Did the trial court err in granting
summary judgment in favor of Diversified and
Alt?
2. Did the trial court err in failing to
continue Diversified’s and Alt’s motions for
summary judgment in order to allow further
discovery?
I. Facts
The events leading to this litigation began in 1990,
when Diversified applied to the Tennessee Department of
Environment and Conservation for a permit to expand a landfill
near Athens, Tennessee, which it had operated since approximately
1981. Diversified’s application precipitated the incorporation
of RAILE by several area residents concerned with the landfill’s
safety and environmental impact. The appellant Williams was not
involved in the initial formation of RAILE.
1
For ease of reference, Diversified and Alt will be collectively
referred to as “the defendants.”
2
The individual plaintiffs are Perry Russell, Don Beal, Betty Beal, Gary
Long, Judy Long and the appellant, Dianna Williams.
2
Members of RAILE, not including Williams, subsequently
participated in a public hearing regarding the proposed landfill
expansion and submitted written comments on the subject. They
also appeared before the McMinn County Commission, seeking a
resolution opposing the expansion of the landfill. During these
appearances, members of RAILE made various statements regarding
prior contamination problems at the landfill and the suitability
of the proposed expansion.
While Williams first became involved with RAILE in
1992, her initial participation was limited to opposing an
incinerator that had been proposed by a company other than
Diversified. In her sworn affidavit, Williams states as follows:
Prior to the time that Diversified sued me
for $13.2 million in March 1993, I had not
participated in any public hearings or McMinn
County Commission meetings concerning the
Mine Road Landfill3. I had not made any
statements concerning the landfill to
government officials or to the press.
I did attend approximately three RAILE
meetings at which the Mine Road Landfill was
discussed and also attended a public hearing
concerning the proposed Mine Road Landfill
expansion in August 1993. I did not speak
about my concerns regarding the landfill
expansion at the public hearing in August
1993 because of the $13.2 million lawsuit
that [Diversified] had filed against me.
This was the extent of my involvement with
RAILE concerning the Mine Road Landfill.
In June, 1991, prior to Williams’ initial involvement
with RAILE, that organization filed suit against Diversified in
the United States District Court for the Eastern District of
3
This is the landfill at which Diversified proposed its expansion.
3
Tennessee. RAILE’s suit was an effort to remedy the discharge of
pollutants from the Mine Road Landfill into two area streams.
The District Court held that Diversified was required to obtain a
discharge permit.4 Pursuant to a February 10, 1993, settlement
agreement in the federal court action, Diversified agreed to
apply for a discharge permit, to comply with pollution
limitations in the meantime, and to pay the fees and expenses of
RAILE’s attorneys.
Approximately one month after the settlement agreement
was executed, Diversified filed suit in state court against RAILE
and nine named individuals, including Williams. Three “John Doe”
defendants were also sued. Diversified was represented by Alt in
that action. The complaint, which was signed by Alt, sought
$13.2 million in compensatory and punitive damages for alleged
wrongful interference with Diversified’s business relations.
Specifically, Diversified alleged that RAILE and the individual
defendants had made false and malicious statements to state
officials and to the general public in an effort to defeat its
application for a landfill expansion permit, and had sought to
destroy Diversified’s existing landfill operation by influencing
others to cease doing business and/or breach contracts with
Diversified. Significantly, the complaint failed to contain any
specific allegations regarding any statements or actions by
Williams.
4
See Residents Against Industrial Landfill Expansion v. Diversified
Systems, Inc., 804 F. Supp. 1036 (E.D.Tenn. 1992).
4
On May 24, 1993, the trial court dismissed
Diversified’s complaint for failure to state a claim upon which
relief could be granted. The trial court denied Diversified’s
motion to amend its complaint, and Diversified appealed to this
court. We reversed the trial court’s decision and remanded the
case to the trial court.5 Thereafter, on May 18, 1994,
Diversified, without amending its complaint, served the
defendants with a notice of voluntary dismissal.
The plaintiffs, including the appellant Williams, filed
the instant action on June 23, 1994, alleging that Diversified
and its attorney, Alt, were guilty of malicious prosecution and
abuse of process as a result of the lawsuit filed by Diversified
against RAILE and the various individuals. In addition to the
general allegations supporting their causes of action, the
plaintiffs alleged that Diversified and Alt filed the prior suit
in order to punish, harass, and silence RAILE, its members, and
other concerned citizens of McMinn County.
Following the filing of the instant malicious
prosecution action, the plaintiffs served Diversified and Alt
with interrogatories and a request for production of documents.
Diversified and Alt responded by moving for a protective order
and a stay of discovery. Williams then filed a motion to compel.
The trial court stayed all discovery, except for the depositions
of the plaintiffs and three of Diversified’s current and former
officers. The plaintiffs proceeded to depose these officers, and
5
See Diversified Systems, Inc. v. Residents Against Industrial Landfill
Expansion, Inc., et al., C/A No. 03A01-9310-CV-00348, 1994 WL 66651
(Tenn.App., E.S., filed March 7, 1994, Sanders, J.).
5
the defendants commenced the depositions of the plaintiffs. A
dispute arose regarding discovery, resulting in the filing of
further motions by both sides. The trial court ultimately stayed
further discovery pending the filing of motions for summary
judgment by the defendants. In its order, the trial
court stated that, upon request of the plaintiffs in their
response to the forthcoming motions for summary judgment, it
would consider permitting additional discovery before ruling on
the motions.
The plaintiffs’ response to the motions for summary
judgment that were subsequently filed by Diversified and Alt
included extensive and specific requests for further discovery.
The trial court, however, denied the plaintiffs’ requests and
granted summary judgment in favor of both Diversified and Alt.
In so doing, it found that further discovery was not necessary;
that the facts “would have led an ordinarily prudent person to
believe that plaintiffs herein were guilty of tortious
interference with [Diversified’s] business interests”; and that
there was no “genuine issue of material fact to support a finding
that [Alt] acted with malice in advising his client to proceed
with a civil action or that he was not fully informed of the
relevant allegations by his client.”
II. Standard of Review
We measure the propriety of the trial court’s grant of
summary judgment against the standard of Rule 56.04,
6
Tenn.R.Civ.P., which provides that summary judgment is
appropriate where
the pleadings, depositions, answers to
interrogatories, and admissions on file,
together with the affidavits, if any, show
that there is no genuine issue as to any
material fact and that the moving party is
entitled to a judgment as a matter of law.
We also note that the nonmoving party, in this case Williams, is
entitled to the benefit of any doubt. Byrd v. Hall, 847 S.W.2d
208, 211 (Tenn. 1993). The court must “take the strongest
legitimate view of the evidence in favor of the nonmoving party,
allow all reasonable inferences in favor of that party, and
discard all countervailing evidence.” Id. at 210-11. All facts
supporting the position of the nonmovant must be accepted as true
by the trial court. Id. at 212. It is only when the material
facts are undisputed and conclusively demonstrate that the movant
is entitled to a judgment that a trial court is justified in
depriving a claimant of its right to a plenary trial; in all
other instances, a trial on the merits is required. Summary
judgment “is clearly not designed to serve as a substitute for
the trial of genuine and material factual matters.” Id. at 210.
When reviewing a grant of summary judgment, an
appellate court must decide anew if judgment in a summary fashion
is appropriate. Cowden v. Sovran Bank/Central South, 816 S.W.2d
741, 744 (Tenn. 1991); Gonzalez v. Alman Constr. Co., 857 S.W.2d
42, 44-45 (Tenn.App. 1993). Since this determination involves a
question of law, there is no presumption of correctness as to the
7
trial court’s judgment. Id.; Hembree v. State, 925 S.W.2d 513,
515 (Tenn. 1996).
III. The Parties’ Contentions
Williams argues that the judgment of the trial court
should be vacated for several reasons. She contends that summary
judgment was inappropriate because the defendants did not carry
their burden of establishing (1) a lack of material factual
issues and (2) entitlement to judgment as a matter of law. In
the alternative, she insists that the trial court’s denial of the
plaintiffs’ request for further discovery constitutes error, in
that it prevented the plaintiffs from fully and adequately
responding to the defendants’ motions for summary judgment. She
argues that her lack of participation in RAILE’s opposition to
the landfill expansion clearly indicates that there was no
probable cause for an action against her. Williams also contends
that factual issues regarding Diversified’s and Alt’s motivation
remain, as evidenced by the fact that their lawsuit fits all of
the characteristics of a lawsuit filed to intimidate a citizen
into silence regarding an issue of public concern.6 Finally, she
argues that any statements attributable to her are protected by
the First Amendment to the United States Constitution, and thus
cannot form the basis for an action against her.
Alt, meanwhile, argues that the trial court did not
abuse its discretion in limiting discovery, but in fact
6
The legislature has recently recognized the evils of this type of
lawsuit. See T.C.A. § 4-21-1001, et seq. This legislation was enacted after
the underlying action was filed and hence is not applicable to this case.
8
restricted only discovery of irrelevant matters. He also
contends that a claim of malicious prosecution is not appropriate
against an attorney under these circumstances, and that the
evidence demonstrates that he acted with probable cause and
without malice.
Diversified has not filed a brief or otherwise made an
appearance on this appeal.
IV. Applicable Law
To prevail on a claim for malicious prosecution, a
plaintiff must establish the following elements: 1) a prior
action was instituted without probable cause; 2) the defendant
brought such action with malice; and 3) the prior action was
terminated in the plaintiff’s favor. Roberts v. Federal Express
Corp., 842 S.W.2d 246, 247-48 (Tenn. 1992); Christian v. Lapidus,
833 S.W.2d 71, 73 (Tenn. 1992); Lewis v. Allen, 698 S.W.2d 58, 59
(Tenn. 1985); Lantroop v. Moreland, 849 S.W.2d 793, 797
(Tenn.App. 1992).7
Probable cause exists when the facts and circumstances
are sufficient to lead an ordinarily prudent person to believe an
individual is guilty of the conduct alleged. Roberts, 842 S.W.2d
7
Several of the cases cited in this opinion involve malicious
prosecution claims in which the underlying proceeding was criminal, rather
than civil, in nature. However, it has been noted that “the same general
rules and limitations apply to an action founded upon a civil proceeding, vis-
a-vis criminal proceedings.” Morat v. State Farm Mut. Auto. Ins. Co., 949
S.W.2d 692, 695 (Tenn.App. 1997). It is clear that a malicious prosecution
claim will lie for a wrongfully pursued civil action. See Peerman v.
Sidicane, 605 S.W.2d 242, 245 (Tenn.App. 1980); Evans v. Perkey, 647 S.W.2d
636, 641 (Tenn.App. 1982).
9
at 248. The existence of probable cause does not depend upon a
subjective assessment of the defendant’s mental state, but
instead is “determined solely from an objective examination of
the surrounding facts and circumstances.” Id. It is now clear
that such a determination is a question for the trier of fact.
Id. at 249.
The element of malice generally addresses the
subjective mental state of the defendant. Id. at 248. However,
the existence of malice can be inferred from the fact that a
lawsuit was brought without probable cause. Lewis v. Williams,
618 S.W.2d 299, 303 (Tenn. 1981); Carter v. Baker’s Food Rite
Store, 787 S.W.2d 4, 8 (Tenn.App. 1989); Kerney v. Aetna Cas. &
Sur. Co., 648 S.W.2d 247, 252 (Tenn.App. 1982).8 This court has
also held that in actions for malicious prosecution, a showing of
a lack of probable cause will give rise to a rebuttable
presumption of malice. Sullivan v. Young, 678 S.W.2d 906, 911
(Tenn.App. 1984); Kerney, 648 S.W.2d at 252. This is a
presumption of fact. Lewis, 618 S.W.2d at 303. The issue of
malice is a question of fact for the jury. Id.
The defendants acknowledge that the third element of
Williams’ claim -- termination of the prior suit in favor of the
plaintiff -- is satisfied in this case. It is clear that the
voluntary termination by non-suit of a complaint satisfies the
8
In Roberts v. Federal Express Corp., 842 S.W.2d 246 (Tenn. 1992), the
Supreme Court overruled Lewis and other decisions to the extent that they had
held that the question of probable cause was ultimately a question of law for
the court. However, the proposition for which Lewis, Carter and Kerney are
cited in this opinion remains valid.
10
requirement of a favorable termination, provided such termination
is not in connection with a settlement or compromise, or
undertaken in order to re-file the action in a different forum.
Christian, 833 S.W.2d at 74.
With regard to malicious prosecution claims brought
against attorneys responsible for filing the underlying lawsuit,
the general rule is that an attorney is not immune from liability
solely by reason of his status. See Debra E. Wax, Annotation,
Liability of Attorney, Acting for Client, for Malicious
Prosecution, 46 A.L.R. 4th 249, 259 (1986). Tennessee recognizes
this general proposition. See Evans v. Perkey, 647 S.W.2d 636
(Tenn.App. 1982), and Peerman v. Sidicane, 605 S.W.2d 242
(Tenn.App. 1980).
V. Analysis
A. Williams’ Claim Against Diversified
As noted earlier, Diversified did not file a brief in
connection with this appeal. It apparently relies on the record
to support the trial court’s grant of summary judgment.
We turn first to the element of probable cause. In the
underlying action, Diversified alleged that RAILE and its
individual members, including Williams, had wrongfully interfered
with its business relations. Diversified claimed that the RAILE
members had made false and malicious statements in order to
obtain a denial of its application to expand the landfill, and
11
had sought to destroy its business by influencing others to
breach contracts or cease doing business with Diversified.
However, neither Diversified’s complaint, nor the affidavits and
exhibits accompanying its motions for summary judgment, contain
any specific allegations regarding Williams. Furthermore, none
of the witnesses deposed by Williams testified as to any specific
knowledge of Williams’ involvement.
George Randi, who was President and Chief Executive
Officer of Diversified at the time of the events in question,
testified in his deposition that he had been “told” that Williams
had made certain statements. However, he could not elaborate on
the statements and did not recall who had given him this
information. He also testified that he had assumed that if
Williams was a member of RAILE, then she was necessarily involved
in its opposition to the landfill. Likewise, Ralph Deporter, a
member of Diversified’s Board of Directors at the time, testified
in his deposition that he was unsure whether Williams had
participated in RAILE’s opposition to the landfill expansion
prior to the filing of Diversified’s lawsuit against her. He
also stated that he had no information that would lead him to
believe that Williams had made any false statements regarding
Diversified’s compliance with its landfill permit. By the same
token, Paul Ray Seaton, a shareholder and former officer of
Diversified, testified in his deposition that he had only seen
Williams’ name in the paper or heard it come up in connection
with RAILE. Like the other witnesses, Seaton could offer no
specific testimony regarding Williams’ involvement.
12
In opposition to Diversified’s allegations, Williams
submitted an affidavit in which she states that she was not
involved in RAILE’s opposition to the landfill prior to the
filing of Diversified’s lawsuit against her. She contends that
she made no statements to government officials or the press and
that she attended no public hearings or county commission
meetings prior to the filing of Diversified’s lawsuit. Williams
states that her only participation in the opposition to the
landfill consisted of attending three RAILE meetings, and one
public hearing -- all in August, 1993, well after Diversified
filed its action against her.
Thus, there is evidence that Williams was not involved
in RAILE’s opposition to the landfill expansion prior to the
filing of Diversified’s suit, and that she did not make any
statements regarding Diversified or the landfill prior to the
time the underlying action was filed. Such evidence necessarily
raises a question as to whether Diversified had probable cause to
file suit against her. From our “objective examination of the
surrounding facts and circumstances”, Roberts v. Federal Express
Corp., 842 S.W.2d 246, 248 (Tenn. 1992), we find that there is an
issue of material fact as to whether an ordinarily prudent person
would have been led to believe that Williams was guilty of
wrongful interference with Diversified’s business interests. Id.
The facts before the trial court, and now before us, clearly do
not negate the element of lack of probable cause.
We turn next to the element of malice. As noted
earlier, the element of malice may be inferred from an absence of
13
probable cause. Lewis v. Williams, 618 S.W.2d 299, 303 (Tenn.
1981); Carter v. Baker’s Food Rite Store, 787 S.W.2d 4, 8
(Tenn.App. 1989); Kerney v. Aetna Cas. & Sur. Co., 648 S.W.2d
247, 252 (Tenn.App. 1982). Thus, if there are issues of disputed
fact in the instant case regarding the existence of probable
cause, it follows that the issue of malice is still a matter of
disputed fact by virtue of the aforesaid inference. It is clear
that the facts before us would support a finding that Diversified
did not have probable cause to sue Williams. This gives rise to
a presumption of malice.
The record reveals that Diversified failed to negate
any one of the elements of Williams’ claim of malicious
prosecution. Taking “the strongest legitimate view of the
evidence” in favor of Williams, and allowing “all reasonable
inferences” in her favor, Byrd v. Hall, 847 S.W.2d 208, 210
(Tenn. 1993), we find that summary judgment for Diversified is
not appropriate.
B. Williams’ Claim Against Alt
We now turn to the grant of summary judgment in favor
of Alt. Alt contends that Williams satisfied neither the
probable cause nor the malice element of her claim. Alt also
maintains that “malicious prosecution is a cause of action
against a party, not an attorney”; however, he has cited no
authority, nor have we found any, to indicate that an attorney is
immune from such a claim. As we have indicated earlier, the case
14
authority is to the contrary. See Evans, 647 S.W.2d at 642;
Peerman, 605 S.W.2d at 245.
Allowing “all reasonable inferences” in Williams’s
favor, Byrd, 847 S.W.2d at 210, we conclude that the record
reflects material disputes as to both probable cause and malice.
The existence of probable cause does not depend on Alt’s
subjective mental state, but instead requires “an objective
determination of the reasonableness of [his] conduct in light of
the surrounding facts and circumstances.” Roberts, 842 S.W.2d at
248. He therefore cannot negate the lack of probable cause
element of Ms. Williams’ claim simply by contending that he filed
the action on behalf of his client and in good faith. As
determined from the surrounding facts and circumstances, issues
of fact remain regarding whether an ordinarily prudent attorney
would have proceeded to file the instant action against her. Id.
The element of malice, on the other hand, does involve
a question of subjective intent. Id. However, as with the claim
against Diversified, there is an issue as to whether probable
cause existed; since an absence of probable cause gives rise to
an inference of malice, Lewis, 618 S.W.2d at 303, Carter, 787
S.W.2d at 8, Kerney, 648 S.W.2d at 252, factual disputes
regarding malice remain as well.
Alt filed an affidavit in this case in which he denied
“that he had any ill-will or animosity against any of the
plaintiffs.” His affidavit consists of a series of sworn denials
15
with respect to the allegations against him in the complaint.
Illustrative of these denials is paragraph 13 of the affidavit:
Affiant denies that he acted maliciously or
oppressively in initiating and prosecuting
the prior lawsuit and its appeal. He further
denies that he had any intent to punish,
intimidate, vex, harass, annoy, injure, or
damage any of the plaintiffs or sought to
frighten or intimidate them in any manner.
On the issue of probable cause, Alt’s affidavit contains sparse
facts:
Affiant became aware through media coverage
that Diversified in connection with its
application for expansion of its landfill was
being opposed by citizens of McMinn County
who were residents in the vicinity of the
landfill.
Any subsequent information learned concerning
the name of the group, their members, etc.,
would all be subject to the attorney/client
privilege.
Alt’s affidavit did not present facts showing that he
had probable cause to file the underlying action.9 That
affidavit certainly was not sufficient to establish undisputed
facts regarding the issue of probable cause as to Williams once
she filed an affidavit reflecting no involvement in the matters
which prompted the filing of the underlying action.
In order to secure summary judgment, Alt had to negate
at least one element of Williams’ claim. He did not show that he
9
As shown in a different context, an attorney, in filing a lawsuit, has
an obligation to conduct a reasonable inquiry regarding the factual basis for
the suit. See Rule 11.02, Tenn.R.Civ.P.
16
had probable cause to institute an action against her on his
client’s behalf. With no facts in Alt’s affidavit showing
probable cause, and with Williams attesting to a total lack of
involvement in the matters alleged in the underlying lawsuit, we
are left with only one conclusion -- a total lack of probable
cause which in turn gives rise to an inference of malice.
In summary, our analysis proceeds along the following
lines. Williams did not participate in any of the matters upon
which the underlying action was based and did not make any
actionable statements. We know this because she says so in her
affidavit and, as the nonmoving party, she is entitled to our
full belief. While she was not, in fact, involved in any
actionable conduct, we must still determine if Diversified and/or
Alt were possessed of facts that would have led an ordinarily
prudent person to believe she was guilty of such conduct.
Neither Diversified nor Alt have placed before us any real facts
showing Williams’ involvement. This, plus her non-involvement in
fact, presents a picture of no probable cause. A lack of
probable cause leads to a presumption of malice. Thus, the
record before us presents a lack of probable cause and malice --
the remaining elements of an action for malicious prosecution.
While an attorney can have probable cause to file a
lawsuit and thereby avoid a malicious prosecution action or an
abuse of process action,10 see Evans, 647 S.W.2d at 642, it is
10
Abuse of process has been defined as a “use of legal process to obtain
a result it was not intended to effect, for wrongful purposes.” Evans, 647
S.W.2d at 641. While this aspect of Williams’ claim is not discussed
extensively in the briefs, we have concluded that neither of the defendants is
entitled to summary judgment as to this claim.
17
likewise clear that his or her involvement can present a factual
scenario supporting a conclusion that the attorney was guilty of
actionable conduct, see Peerman, 605 S.W.2d at 245. In this
case, we do not know the facts, if any, that prompted Alt to
believe that Williams was guilty of the matters alleged in the
underlying lawsuit. Since this information is not now available
to us, Alt is not entitled to a dismissal of this action.
C. Trial Court’s Limitation of Discovery
Having determined that the papers before us do not
justify a grant of summary judgment to either of the defendants,
18
we pretermit the appellant’s alternative basis for attacking
summary judgment, i.e., the alleged failure of the trial court to
allow additional discovery before deciding the defendants’
motions for summary judgment. We do not believe it appropriate
for us to decide whether, and to what extent, additional
discovery is appropriate in this case. Those issues are best
left to the trial court for future determination.
VI. Conclusion
For the foregoing reasons, we hold that the trial court
erred in granting Diversified and Alt summary judgment as to the
plaintiff Williams. That portion of the trial court’s judgment
is hereby vacated. In so holding, we express no opinion as to
the merits of either claim. Costs on appeal are assessed against
the appellees. This case is remanded to the trial court for such
further proceedings as are appropriate, consistent with this
opinion.
__________________________
Charles D. Susano, Jr., J.
CONCUR:
_________________________
Houston M. Goddard, P.J.
_________________________
William H. Inman, Sr.J.
19