brent-bates-builders-inc-and-brent-bates-individually-v-rahul-malhotra ( 2014 )

Opinion filed March 14, 2014
In The
Eleventh Court of Appeals
__________
No. 11-13-00119-CV
__________
BRENT BATES BUILDERS, INC. AND BRENT BATES,
INDIVIDUALLY, Appellants
V.
RAHUL MALHOTRA, INDIVIDUALLY AND D/B/A THE
MALHOTRA LAW FIRM; VENIT MALHOTRA,
INDIVIDUALLY AND D/B/A THE MALHOTRA LAW FIRM;
AND SALVADOR VILLALOBOS, Appellees
On Appeal from the 238th District Court
Midland County, Texas
Trial Court Cause No. CV48540
MEMORANDUM OPINION
Brent Bates Builders, Inc. and Brent Bates, individually, (collectively
referred to as “Bates”) appeals from the final judgment of the trial court in favor of
Rahul Malhotra, individually and d/b/a the Malhotra Law Firm; Venit Malhotra,
individually and d/b/a the Malhotra Law Firm; and Salvador Villalobos
(collectively referred to as “Malhotra”). In one issue on appeal, Bates challenges
the judgment of the trial court in which it granted Malhotra’s no-evidence motion
for summary judgment on Bates’s claim of malicious prosecution. We affirm.
I. Elements of Malicious Prosecution Claim
To support a prima facie claim for malicious prosecution in a civil case, a
plaintiff must allege the following facts:
(1) the institution or continuation of civil proceedings against the
plaintiff;
(2) by or at the insistence of the defendant;
(3) malice in the commencement of the proceeding;
(4) lack of probable cause for the proceeding;
(5) termination of the proceeding in plaintiff’s favor; and
(6) special damages.
Tex. Beef Cattle Co. v. Green, 921 S.W.2d 203, 207 (Tex. 1996). Bates filed an
original petition that alleged malicious prosecution. Malhotra later moved for
judgment as a matter of law because Appellant had adduced no evidence that
raised a question of material fact on the elements of special damages, malice, and
lack of probable cause. The trial court granted Malhotra’s motion for no-evidence
summary judgment.
II. Background
The summary judgment evidence showed that Rahul Malhotra and the
Malhotra Law Firm represented Salvador Villalobos in a personal injury suit
against Bates after Villalobos was allegedly injured while he worked as a contract
laborer for Bates’s construction business. This underlying lawsuit was eventually
terminated in Bates’s favor over five years after its commencement.
2
Bates subsequently filed a malicious prosecution claim against Malhotra in
which Bates claimed that Malhotra caused “injury to [his] reputation, or credit
rating; [loss of] value of [his] use of property during [the] time period [he] was
denied [the] use [of it]; physical and emotional distress; expenses for defense in the
underlying lawsuit; and financial distress.” Bates also claimed mental anguish and
exemplary damages. Bates included with his original petition his first set of
interrogatories, requests for disclosure, and a request for production.
Malhotra answered with a general denial and also objected and responded to
the discovery requests, which included assertions of the “attorney-client privilege.”
Ten months after Bates sued, Malhotra moved for summary judgment on no-
evidence grounds; Malhotra claimed that Bates had failed to provide any evidence
of malice, lack of probable cause, and special injury.
Before the trial court held a hearing on the motion for summary judgment,
Bates took the oral deposition of Rahul Malhotra. Bates subsequently filed his
response to Malhotra’s no-evidence motion for summary judgment. In the
response, Bates asserted that Malhotra relied on the attorney-client privilege and
refused to answer substantially all of the questions propounded. Bates argued that
Malhotra’s refusal to answer the discovery requests constituted fraud, crime, and
obstruction of justice. The record reflects this was the first time that Bates
complained of Malhotra’s discovery responses.
Bates attached to his response his affidavit in which he stated that the
underlying suit was groundless, had created havoc on Bates’s family, and had
brought Bates to near financial and personal ruin. Bates also outlined in his
affidavit that Malhotra had bullied, harassed, and tried to intimidate him and his
lawyers since their first contact. Bates also included four exhibits:
1. Exhibit A—a breakdown of gross receipts, net profits, and legal expenses
throughout the progression of the underlying suit;
3
2. Exhibit B—profit and loss figures from Business Schedule C and IRS
filings in each year from 2002 through 2010 and profit and loss figures
from 2011;
3. Exhibit C—profit and loss projections and graphs compiled according to
the 2002 through 2011 figures; and
4. Exhibit D—a summary for losses claimed in years 2008 through 2011, as
prepared by Kirk Fritzchen, CPA.
The trial court heard Malhotra’s no-evidence motion for summary judgment
on December 21, 2012. When the trial court asked for a response to Malhotra’s
claim that Bates had failed to provide evidence of special injury, Bates’s trial
counsel responded, “I think that’s a horrible position in the law. There should be
some control over litigation. To say you can only have a harm that you can feel or
touch before it’s compensable, [that is] absurd.” Bates’s counsel then referenced
the mental anguish damages and monetary damages that had been pleaded.
The trial court concluded that Bates had provided no evidence that would
create a genuine issue of material fact on the special damages element but declined
to rule on the elements of malice and lack of probable cause. The trial court gave
Bates the opportunity to further brief special damages and ruled that, if he could
provide no further evidence of special damages, summary judgment would be
granted.
After the hearing, Bates filed an amended petition, in which he claimed
abuse of process, negligence, and tortious interference in addition to the existing
malicious prosecution claim. The first amended petition repeated the same damage
allegations that Bates had alleged in his original petition; he claimed no additional
damages. Bates attached his second affidavit and swore under oath that the
underlying lawsuit had cost him money, time, emotional distress, and irreparable
damage to his finances and business.
4
Malhotra answered with another general denial and filed a supplemental
motion for summary judgment that claimed Bates had failed to provide any
evidence of malice, lack of probable cause, and special damages; the trial court
agreed and granted partial summary judgment on no-evidence grounds. After the
entry of the partial summary judgment, Bates abandoned his first amended petition.
Because summary judgment had already been granted on malicious prosecution,
the only claim in Bates’s original petition, the trial court entered a final judgment
against Bates.
III. Issue Presented
Bates brings a single issue in which he argues that the trial court erred when
it granted the no-evidence motion for summary judgment. Bates’s issue rests on
two principal arguments: (1) the evidence he put forth supported a claim of
malicious prosecution and (2) if the evidence put forth failed to support a claim of
malicious prosecution, the lack of evidence was caused by Malhotra’s failure to
cooperate during the discovery process. We address each argument.
IV. Standard of Review
We review a no-evidence summary judgment under the same legal
sufficiency standard as a directed verdict. Merriman v. XTO Energy, Inc., 407
S.W.3d 244, 248 (Tex. 2013). Under that standard, we consider the evidence in
the light most favorable to the nonmovant, crediting evidence a reasonable jury
could credit and disregarding contrary evidence and inferences unless a reasonable
jury could not. Id. The nonmovant must produce summary judgment evidence
that raises a genuine issue of material fact as to each challenged element of its
cause of action. TEX. R. CIV. P. 166a(i); Merriman, 407 S.W.3d at 248. A no-
evidence challenge will be sustained when:
(a) there is a complete absence of evidence of a vital fact, (b)
the court is barred by rules of law or of evidence from giving weight
5
to the only evidence offered to prove a vital fact, (c) the evidence
offered to prove a vital fact is no more than a mere scintilla, or (d) the
evidence conclusively establishes the opposite of the vital fact.
Merriman, 407 S.W.3d at 248 (quoting King Ranch, Inc. v. Chapman, 118 S.W.3d
742, 751 (Tex. 2003)).
V. Analysis
On appeal, Bates limits his argument to the special damages issue and
requests this court to remand the case for the trial court to order discovery and rule
on the elements of malice and probable cause. We limit our review to the special
damages element of Bates’s malicious prosecution claim.
A. No Evidence of Special Damages
Bates contends that he provided sufficient evidence of the element of special
damages to overcome summary judgment. A plaintiff must suffer special
damages—or special injury—before he can recover for a malicious prosecution of
a civil case. Tex. Beef Cattle Co., 921 S.W.2d at 208. To prove the element of
special damages, there must be evidence of some physical interference with the
plaintiff’s person or property in the form of an arrest, attachment, injunction, or
sequestration. Id. at 208–09. The mere filing of a lawsuit cannot satisfy the
special injury requirement, and it is insufficient that a party has suffered the
ordinary losses incident to defending a civil suit, such as inconvenience,
embarrassment, discovery costs, and attorney’s fees. Id. Once the special injury
hurdle has been cleared, however, that injury serves as a threshold to recover the
full range of damages incurred because of the malicious litigation. Id. at 209.
Texas courts have consistently declined to hold that the special injury
requirement may be satisfied by consequential damages that result from the
underlying suit. See, e.g., id. at 208–09; Airgas-Southwest, Inc. v. IWS Gas &
Supply of Tex., Ltd., 390 S.W.3d 472, 479–80 (Tex. App.—Houston [1st Dist.]
6
2012, pet. denied); Am. Bd. of Obstetrics & Gynecology, Inc. v. Yoonessi, 286
S.W.3d 624, 629 (Tex. App.—Dallas 2009, pet. denied). Such consequential
damages include attorney’s fees and litigation costs; loss of professional or
personal reputation; humiliation; mental anguish; loss of business and contracts;
pecuniary and economic losses; diversion of time and attention to defending
against the suit; increased insurance premiums; and loss of ability to obtain credit.
Airgas-Southwest, 390 S.W.3d at 479–80.
Bates’s first amended petition alleged damages as follows: injury to his
reputation or credit rating; the value of use of property during the time period
Bates was denied use; physical and emotional distress; expenses for defense in the
underlying lawsuit; and financial distress. In his affidavit, Bates alleged that the
case wreaked havoc on his family, brought him to near financial and personal ruin,
and caused him extreme pain and suffering and that Malhotra bullied, harassed,
and tried to intimidate Bates and his lawyers. He also attached multiple exhibits
that showed the financial loss suffered by him and his business. All of these
alleged damages are merely consequential damages incidental to Malhotra’s filing
of the underlying lawsuit; they do not satisfy the special injury requirement in
Bates’s malicious prosecution claim. See Finlan v. Dallas Indep. Sch. Dist., 90
S.W.3d 395, 406 (Tex. App.—Eastland 2002, pet. denied) (holding that claims of
damage to reputation, pecuniary losses, adverse tax losses, personal injuries, loss
of ability to obtain credit, and loss of property interests do not satisfy special injury
requirement for malicious prosecution claims). Bates adduced no evidence of any
physical interference with Bates’s person or property, as required by Texas courts,
to raise an issue of material fact on special damages in a malicious prosecution
claim. Bates did not allege, and adduced no evidence of, any arrest, attachment,
injunction, or sequestration.
7
Bates has suggested that policy considerations and tort reform support the
position that the special damages typically required—i.e., physical interference
with person or property—should not be essential elements of a malicious
prosecution claim. But it is well established that a physical or personal
interference is required to support a malicious prosecution claim, and the
functionality of the special damages requirement is not limited to reducing the
number of malicious prosecution cases. See, e.g., Tex. Beef Cattle Co., 921
S.W.2d at 209 (noting that special damage requirement assures good faith litigants
access to judicial system without fear of intimidation by countersuit for malicious
prosecution and prevents needless and endless vexatious lawsuits); Airgas-
Southwest, 390 S.W.3d at 483 (noting that special injury is important in malicious
prosecution claims because successful defendants are usually awarded incidental
costs in underlying suit). We are not persuaded by Bates’s arguments in which he
urges the abandonment of the special injury requirement. Because Bates provided
no evidence of the essential element of special damages in his malicious
prosecution claim, we hold that the trial court did not err when it granted
Malhotra’s no-evidence motion for summary judgment.
B. Malhotra’s Alleged Failure to Cooperate in Discovery Process
Bates next complains of Malhotra’s failure to cooperate during the discovery
process. According to Bates, Malhotra repeatedly asserted the attorney-client
privilege in an aggressive and abusive manner when he declined to answer many of
Bates’s discovery requests. Bates argues that, because Malhotra refused to respond
to such requests, he could not form an evidentiary basis to support his claim of
malicious prosecution.
When a party fails to adequately respond to a discovery request or asserts a
privilege as his response, the party making the request should move to compel and
request a hearing so the trial court may rule on the propriety of the response or
8
privilege assertion. See TEX. R. CIV. P. 193.4, 215.1. If an appellant has not
obtained a ruling by the trial court on a discovery dispute, he has failed to preserve
error for our review. See U. Lawrence Boze' & Assocs., P.C. v. Harris Cnty.
Appraisal Dist., 368 S.W.3d 17, 32 (Tex. App.—Houston [1st Dist.] 2011, no
pet.); see also TEX. R. APP. P. 33.1(a)(1).
Bates did not complain to the trial court of Malhotra’s failure to respond
until after Malhotra moved for summary judgment, which was nine and one-half
months after Malhotra’s initial response to the discovery request. Bates never filed
either a formal objection or a motion to compel the discovery responses. The
record reflects that the trial court issued no rulings on Bates’s discovery issues.
Therefore, we conclude that Bates failed to preserve error for our review as to the
discovery dispute.
Malhotra argues in his brief that Bates abandoned all claims for relief when
he abandoned his first amended petition and that, therefore, Bates cannot complain
of the trial court’s grant of summary judgment. Because we have held that the trial
court’s grant of Malhotra’s no-evidence motion for summary judgment was proper,
we need not address this issue. Moreover, we note that Bates did not abandon his
original petition. Having rejected each of Bates’s arguments on appeal, we
overrule his sole issue.
VI. This Court’s Ruling
We affirm the judgment of the trial court.
March 14, 2014 MIKE WILLSON
Panel consists of: Wright, C.J., JUSTICE
Willson, J., and Bailey, J.
9