Appellant Havilah Real Property Services, LLC ("Havilah") is a Maryland limited liability company engaged in the business of buying, selling, and owning real estate. Havilah filed a complaint against attorney Ronald Early and his firm, Lerch, Early & Brewer, Chtd., alleging that Early and the firm (collectively, "the Attorneys") conspired with one of their former clients to file a frivolous lawsuit against Havilah, thereby engaging in malicious use of process. The Circuit Court for Montgomery County dismissed Havilah's complaint with prejudice, which Havilah now appeals. For the following reasons, we affirm the judgment of the circuit court.
This case is best understood as a story of three separate but related cases.
First, in 2007, Vicky Lynn Karen and VLK, LLC
While the Maryland action was pending, Havilah and Alderman filed a complaint
Finally, we come to the case before us. On May 25, 2012, Havilah filed a complaint in the Circuit Court for Montgomery County against the Attorneys. The complaint alleged that the Attorneys "knew that there was no probable cause to support" 31 of the 48 lis pendens the Attorneys had filed on Havilah-owned properties in the Maryland action. Havilah alleged that Karen and VLK's
On October 19, the circuit court granted the Attorneys' motion to dismiss the complaint but also granted Havilah leave to amend.
Havilah's amended complaint, filed October 31, included additional allegations as to what the Attorneys knew at the time the 31 lis pendens were filed in the Maryland action. For example, Havilah alleged that the Attorneys knew that "Carlson was Karen's business partner and ex-lover" and that "Karen remained obsessed with Carlson, and clandestinely observed him and Alderman on occasion." Havilah also alleged that the Attorneys knew that VLK "had no funds to purchase any of the 31 properties and was no longer actively engaged in acquiring real estate." Instead, according to Havilah, VLK and Karen sought "to stop Havilah from selling the properties so they could extort money from Havilah and thereby share in the profits despite the fact that they had done no work that would justify any payment." Ultimately, according to Havilah, the Attorneys "expressed no hesitation and willingly agreed to participate in, and further, Karen's and VLK's malicious and tortious goal to harm Havilah and its business interests, and thereby punish Carlson and Alderman." Havilah sought at least $980,301 in compensatory damages.
The Attorneys filed a motion to dismiss, or, in the alternative, for summary judgment on November 28, which the circuit court considered at a hearing on February 27, 2013. At the beginning of the hearing, the judge stated "I believe that I actually remember parts of this case, certainly not much of it, but I remember this of Ms. Karen's case. And I remember that they were buying properties there in Anacostia near the stadium.... [B]ut I do have some familiarity with the underlying case here in the State of Maryland. And I actually have some memory of it."
In an oral ruling, the court found that
The court dismissed the complaint with prejudice in a written order filed on March 4, 2013. Havilah timely filed this appeal. Additional facts will be discussed below.
Havilah raises five issues
Because our answer of "no" to the first two questions conclusively disposes of the appeal, we decline to reach the remaining issues. We therefore affirm the judgment of the circuit court.
When reviewing a motion to dismiss, an appellate court must determine "whether the trial court was legally correct" in concluding that the "alleged facts and permissible inferences" of a complaint "nonetheless fail to afford relief to the plaintiff." Sprenger v. Public Serv. Comm'n of Md., 400 Md. 1, 21, 926 A.2d 238 (2007). The reviewing court must "assume the truth of, and view in a light most favorable to the non-moving party, all well-pleaded facts and allegations contained in the complaint, as well as all inferences that may reasonably be drawn from them." Parks v. Alpharma, Inc., 421 Md. 59, 72, 25 A.3d 200 (2011) (Quotations omitted). The court is confined to "the universe of facts pertinent to the court's analysis of the motion" and focuses on "the four corners of the complaint and its incorporated supporting exhibits, if any." Id. (Quotations omitted).
Havilah alleged only one count in its complaint: conspiracy to commit malicious use of process. Because "no action in tort lies for conspiracy to do something unless the acts actually done, if done by one person, would constitute a tort," we must determine whether Havilah adequately pled that the Attorneys committed the alleged tort of malicious use of process. See Alleco Inc. v. Harry & Jeanette Weinberg Foundation, Inc., 340 Md. 176, 190, 665 A.2d 1038 (1995) (Quotation omitted). Malicious use of process
See One Thousand Fleet Ltd. P'ship v. Guerriero, 346 Md. 29, 37, 694 A.2d 952 (1997) (Citations omitted).
The circuit judge based his decision to dismiss the complaint on two grounds: (I) Havilah failed to show a lack of probable cause, and (II) Havilah failed to allege malice. We address each basis in turn.
In discussing the probable cause element in his oral ruling, the circuit judge referred to the Maryland action and stated that "the court actually has already talked about it in argument here, heard the case, denied a motion for summary judgment, a motion for [judgment] at the close of the plaintiff's case, and a motion for directed verdict at the close of the case.... There
Probable cause, in malicious use of process, "means a reasonable ground for belief in the existence of such state of facts as would warrant institution of the suit or proceeding complained of." One Thousand Fleet Ltd. P'ship, 346 Md. at 37, 694 A.2d 952 (Quotation omitted). The lack of probable cause is an "indispensable element[]," without which a claim of malicious use of process must fail. Owens v. Graetzel, 149 Md. 689, 696, 132 A. 265 (1926). A plaintiff seeking to establish a suit for malicious use of process on the ground of conspiracy between a client and an attorney has the burden of "show[ing] such act or acts as amount to a lack of probable cause and an agreement to bring an action understood by both attorney and client to be groundless, and brought as such." North Point Const. Co. v. Sagner, 185 Md. 200, 208, 44 A.2d 441 (1945).
A prior judgment against the defendant, now the plaintiff in a malicious use of process case, is generally "conclusive proof of probable cause," even if the judgment is later reversed on appeal.
Although no Maryland cases have considered whether rulings on motions for judgment have any bearing on a later determination of probable cause, case law of other states sheds some light on the issue. The states that have considered the question generally fall into two camps, with the dividing line being whether a prior ruling is just one factor to consider in a probable cause evaluation or whether it creates a presumption of probable cause.
In Kirk v. Marcum, 713 S.W.2d 481, 485 (Ky.Ct.App.1986), the Court of Appeals of Kentucky rejected the contention that "probable cause was established as a matter of law by the trial court's failure to sustain [the defendant's] motion for a directed verdict" in the underlying action. The court afforded no presumption of probable cause "merely because the defendant loses prejudgment motions" because "[i]n ruling on a defendant's motion for directed verdict the court must draw all fair and rational inferences in favor of the plaintiff and grant the motion only when the evidence is insufficient to support a verdict for the plaintiff." Id. Arizona likewise takes a narrow view of the persuasiveness of a ruling on a prior motion for judgment and treats the denial of such a motion as just one factor in the probable cause inquiry.
The United States Court of Appeals for the Eighth Circuit provides an example of the alternative "presumption" approach. In Porous Media Corp. v. Pall Corp., 186 F.3d 1077, 1080 (8th Cir.1999), the Court of Appeals held that the "rejection of [the plaintiff's] motion for judgment as a matter of law ... fatally undermines its claims for malicious prosecution." The Court reasoned that because the applicable Federal Rule of Civil Procedure, Rule 50(a), "permits dismissal when `there is no legally sufficient evidentiary basis for a reasonable jury to find for' the non-moving party at the close of that party's evidence,"
Other courts that have adopted the presumption of probable cause in cases involving the denial of a motion for summary judgment
We believe that, when faced with the denial of a motion for judgment, the presumption approach is more in line with Maryland case law. First, the Court of Appeals has held that the issuance of an preliminary injunction can provide evidence of probable cause, even if the injunction is later overturned. See H.P. Rieger & Co. v. Knight, 128 Md. 189, 199, 97 A. 358 (1916). The Court emphasized that the type of injunction matters when it comes to the evaluation of probable cause:
A preliminary injunction is only "granted after opportunity for a full adversary hearing on the propriety of its issuance but before a final determination of the merits of the action." Md. Rule 15-501(b). Motions for judgment likewise require a court to consider in detail the available facts and applicable law, rather than a cold and undeveloped record. See Md. Rule 2-519(b). "If there was any evidence, no matter how slight, that was legally sufficient to generate a jury question, the motion [for judgment] was properly denied." Ayala v. Lee, 215 Md.App. 457, 467, 81 A.3d 584 (2013) (Quotations omitted). In the Maryland action, Havilah's motions for judgment were filed well into the proceedings, on the eighth and twelfth days of a fourteen-day jury trial. Although Havilah complains now that there is no evidence that the circuit court specifically considered the merits of 31 lis pendens when denying its motions, these complaints cannot outweigh the fact that the circuit court evaluated the case as a whole on two separate occasions and answered against Havilah each time.
Second, it has long been recognized in Maryland that
Owens, 149 Md. at 694-95, 132 A. 265; see also State v. Rendelman, 404 Md. 500, 522, 947 A.2d 546 (2008) (sanctioning litigants is "heavily disfavored because [it] discourage[s] the resort to courts") (quotation omitted); Supreme Lodge American Protective League of Baltimore City v. Muverzagt, 76 Md. 104, 108, 24 A. 323 (1892) ("Litigation of this character should be discouraged rather than promoted."); Clements, 67 Md. at 462-63, 10 A. 442 (Malicious use of process suits are not "encouraged, because the law recognizes the right of everyone to sue for that which he honestly believes to be his own, and the payment of costs incident to the failure to maintain the suit is ordinarily considered a sufficient penalty"). Cf. Piselli v. 75th Street Medical, 371 Md. 188, 205, 808 A.2d 508 (2002) (Article 19 of the Maryland Declaration of Rights "generally protects two interrelated rights: (1) a right to a remedy for an injury to one's person or property; (2) a right of access to the courts").
Finally, in the context of a Maryland Rule 1-341 motion for attorney's fees, we have previously adopted similar reasoning regarding the weight afforded to a circuit court's denial of a motion for judgment.
Given that under Maryland common law, suits for malicious use of process are disfavored, it is more sensible to treat the denial of a motion for judgment as a presumption in favor of probable cause, rather than treating it as just a factor in the probable cause evaluation. Malicious use of process defendants cannot bear the burden of proving that the prior action had probable cause. Rather, plaintiffs must prove that "the prosecution complained of was without `probable cause,' and unless that burden be met there can be no recovery."
Accordingly, we hold that the denial a motion for judgment "is a sound indicator of probable cause" that "normally establishes there was probable cause to sue, thus barring" a subsequent malicious use of process suit.
The circuit court also dismissed Havilah's complaint for its failure to allege malice, stating that "there are no specific facts to show that the attorney acted with malice, bad intent, or out of personal interest. I think the — he has to do that to overcome the qualif[ied] privilege...." Havilah argues that "when an attorney knowingly aids a client in the commission of an unlawful act, the [c]ourts have held malice is implied and the attorney may be held liable."
Attorneys have a qualified privilege that protects them from potential civil liability to their clients' litigation adversaries, except where the attorneys act with actual malice, bad intent, or for the attorneys' personal benefit. Fraidin v. Weitzman, 93 Md.App. 168, 236-37, 611 A.2d 1046 (1992). In its complaint, Havilah alleged only that VLK's malice was "imputed to" the Attorneys and did not allege any facts of actual malice. The circuit court correctly found that, because Havilah did not allege actual malice, its complaint could not establish this element of malicious use of process.
Further, in focusing only on the meaning of malice in the context of an attorney's qualified privilege, Havilah ignored the principles defining malice for the purposes of malicious use of process. In this tort, malice "means that the party instituting proceedings was actuated by an improper motive" and "may be inferred from a lack of probable cause." One Thousand Fleet Ltd. P'ship, 346 Md. at 37, 694 A.2d 952. Improper motive is narrowly defined to mean there was no legal basis for the assertion of the claim. See Owens, 149 Md. at 697, 132 A. 265 ("[A] sinister and malicious motive does not make an act wrongful so long as the act is within the party's legal rights."). But where probable cause exists, "malice, however strong, will not constitute a cause of action." Walker v. American Sec. & Trust. Co. of Washington, D.C., 237 Md. 80, 89, 205 A.2d 302 (1964). Havilah's allegations as to the Attorneys' knowledge and motive thus cannot show malice because there was probable cause to initiate the Maryland action.
Finally, in this case, Havilah sought to hold the Attorneys liable in addition to VLK and Karen, in the amount of at least $980,301 in compensatory damages. It already won a $602,942 jury verdict, plus costs and interest, against VLK in its D.C. case. Havilah seeks to satisfy the D.C. judgment against VLK by filing a suit in Maryland over VLK's former legal representation. Maryland law does not recognize such a collateral action.
For all these reasons we affirm the judgment of the circuit court.
The rule now limits the imposition of sanctions to instances of a "motion by an adverse party" and does not refer to a court's power to impose sanctions sua sponte. See Md. Rule 1-341(a).