OREN ROYAL OAKS VENTURE, Plaintiff and Appellant, v. Ronald T. STANMAN, et al., etc., Defendants and Respondents.
Plaintiff in an action for abuse of process appeals from a summary judgment in favor of defendants. We reverse.1
At issue on this appeal is the role of the privilege created by Civil Code section 47 in an action for abuse of process. That statute provides in part that: “A privileged publication or broadcast is one made—․ 2. In any (1) legislative or (2) judicial proceeding, or (3) in any other official proceeding authorized by law, ․”
Oren Royal Oaks Venture (Oren) a limited partnership instituted this action against Ronald T. Stanman and the various lawyers and law firms who represented Stanman, alleging that the defendants were guilty of conspiracy to abuse legal process and substantive abuse of process. The only parties to this appeal are Oren and the law firm of Greenberg, Bernhard, Weiss & Karma, Incorporated.2
The alleged abuse of process had its genesis in Stanman's filing of a petition for writ of mandate purporting to challenge the sufficiency of an environmental impact study of a housing subdivision which Oren was attempting to develop with the approval of the City of Los Angeles. The California Environmental Quality Act (CEQA) authorizes private individuals acting in the public interest to institute action to enforce the provisions of that act. (Pub.Resources Code, §§ 21165, et seq.; see also Bozung v. Local Agency Formation Com. (1975) 13 Cal.3d 263, 118 Cal.Rptr. 249, 529 P.2d 1017; Friends of Mammoth v. Board of Supervisors (1972) 8 Cal.3d 247, 104 Cal.Rptr. 761, 502 P.2d 1049.)
In the instant case, Stanman was personally affected by Oren's proposed development since his home was located adjacent to the development. Prior to filing the CEQA action, he had opposed the development before the Los Angeles City Planning Commission. According to Oren's complaint, after the filing of the CEQA action, Stanman, through his counsel, engaged in delaying tactics designed to injure and bring pressure on Oren.
Ultimately, Stanman failed in his efforts to block the project. The trial court denied his petition for a writ of mandate and his appeal from that judgment was unsuccessful, as was an original proceeding for mandate which he filed with this court.
Oren then instituted the present action for abuse of process, alleging that the delay occasioned by Stanman's various legal maneuvers had caused him substantial monetary damage. The gravamen of Oren's action is that Stanman and his counsel used the CEQA mandamus action, not for the intended purpose of insuring due consideration of environmental impact, but as a device to extort money and property from Oren as a price for abandoning the CEQA action.
That this was Stanman's purpose is supported by evidence that at a meeting between Jerry Oren, the general partner in Oren and Stanman, held after the filing of the action, Stanman stated that he had Oren “by the balls” and that he, Stanman, was declaring himself in as “Oren's partner” for 10% of the value of the project, which, according to Stanman, was about $500,000.
At a subsequent meeting, Stanman apparently reduced his demand to $250,000 or in the alternative a “manufactured lot” in the planned development. Further meetings followed involving Stanman and his counsel, including these defendants, and Oren and his counsel.
We need not here recite all of the statements and demands by Stanman and his counsel. At this stage of the proceedings, defendants do not challenge Oren's showing that the quoted statements and demands were made, that Stanman's attorneys were aware of them and presented these demands on his behalf, all the while making every effort and using every available legal device to delay commencement of the development and to keep the CEQA litigation alive.
“ ‘If ․ an attorney is actuated by malicious motives, or shares the illegal motives of his client, he may be personally liable with the client for damage suffered by a third person as the result of the attorney's actions.’ ” (Roberts v. Ball, Hunt, Hart, Brown & Baerwitz (1976) 57 Cal.App.3d 104, at 109, 128 Cal.Rptr. 901.) An attorney may not conspire with a client to engage in intentional tortious conduct toward a third person.
Defendants' motion for summary judgment was grounded essentially on a claim of privilege under Civil Code section 47(2). They argue that Oren's action is based on “publications,” to wit, statements and demands made in settlement negotiations and hence, even if extortionate are privileged, citing Rosenthal v. Irell & Manella (1982) 135 Cal.App.3d 121, 185 Cal.Rptr. 92, and Asia Investment Co. v. Borowski (1982) 133 Cal.App.3d 832, 184 Cal.Rptr. 317.
In reviewing the grant of a motion for summary judgment, we must determine whether the showing made by the moving party in the trial court established that there were no triable issues of fact which could support a judgment for the opposing party and that the moving party was entitled to judgment as a matter of law. (Vesely v. Sager (1966) 5 Cal.3d 153, 169, 95 Cal.Rptr. 623, 486 P.2d 151; Tauber-Arons Auctioneers Co. v. Superior Court (1980) 101 Cal.App.3d 268, 273–274, 161 Cal.Rptr. 789; MCA Records, Inc. v. Newton-John (1979) 90 Cal.App.3d 18, 21, 153 Cal.Rptr. 153.) We have concluded that the trial court was originally correct in denying the motion for summary judgment. Clearly there are several factual issues to be tried unless the privilege bars the action at the threshold and our analysis leads us to conclude that it does not.
Civil Code section 47(2) in its inception protected litigants from liability for defamation as a result of statements contained in pleadings or made in furtherance of the objective of a matter in litigation. In an effort to preserve free access to the courts by litigants, the privilege has been extended to apply in actions based upon a number of torts other than defamation.
In Rosenthal v. Irell & Manella, supra, attorneys for a judgment creditor allegedly induced the debtor's insurance carrier to settle in breach of a provision in the insurance contract requiring the insured's consent to settlement. The judgment debtor then brought an action against the attorneys for inducing a breach of contract.
After tracing the development of the privilege beyond the area of defamation, we concluded that the statements by the attorneys urging settlement were privileged publications and hence a cause of action for inducing a breach of contract would not lie. We do not believe that anything we said in Rosenthal is necessarily dispositive of the case at bench or supports defendant's position.
In our previous grant of the peremptory writ in this case we did, however, rely on language from Asia Investment Co. v. Borowski, supra. On further analysis that language now appears to us to be dicta and to the extent that it suggests that acts constituting abuse of process are privileged, we disagree.
Asia Investment Company had originally been a defendant in two separate actions brought by Borowski. One action involved a dispute over title to property, the other was a CEQA action involving the same property.
Asia contended that in settlement discussions concerning the title dispute matter, Borowski 's counsel attempted to use the threat of the CEQA action as leverage in forcing a settlement. The CEQA action was eventually dismissed on the grounds of laches, it having been filed well after the title dispute arose.
Asia then instituted an action against Borowski for (1) malicious prosecution, and (2) intentional interference with prospective, economic advantage. The trial court granted summary judgment for Borowski after denying Asia 's motion to amend its complaint. The proposed amended complaint repleaded the causes of action for malicious prosecution and tortious interference with economic advantage and added a count for abuse of process.
The Court of Appeal concluded that the summary judgment on the malicious prosecution action was proper since the dismissal of the CEQA action on the grounds of laches was not a favorable termination (Lackner v. LaCroix (1979) 25 Cal.3d 747, 159 Cal.Rptr. 693, 602 P.2d 393) “on the merits.” Next the Court of Appeal essentially disposed of the denial of the request for leave to amend the complaint as a proper exercise of trial court discretion.
In its discussion of the latter issue the court, as regards the proposed cause of action for malicious prosecution, reiterated the lack of a favorable termination. Next the court held that, as to the cause of action for tortious interference with prospective economic advantage, the filing of the CEQA action and the threat made regarding it were privileged under Civil Code section 47(2).
So far so good. The action for intentional interference with prospective economic advantage was predicated on the “publishing” of the threat and the filing of the action both of which publications were privileged in the context of the cause of action asserted.
It is the Asia court's discussion of the abuse of process cause of action, which was essentially dicta, and which cause us concern. In that connection the court observed that the “threat” made by counsel in the settlement negotiation was privileged under Civil Code section 47(2) and thus no abuse of process could be proved.
Although the Asia opinion does not specifically say so, it appears that the court viewed the “threat,” as distinguished from the filing of the CEQA action, as the conduct which allegedly constituted the abuse of process.
In the case at bench the CEQA action was completely resolved in Oren's favor. That resolution was “on the merits” hence it was a favorable termination which would have supported an action for malicious prosecution in which the filing of the action is the tortious conduct. In such an action the statements and conduct of Stanman and his counsel would not be privileged and could be used as evidence of a lack of probable cause and malice.
“․ Civil Code section 47, subdivision 2, does not apply to every action in which a privileged communication may provide some element of the tort. Thus, ‘the fact that “a communication may be absolutely privileged for the purposes of a defamation action does not prevent its being an element of an action for malicious prosecution in a proper case.” ’ ” (Block v. Sacramento Clinical Labs, Inc. (1982) 131 Cal.App.3d 386, at 392, 182 Cal.Rptr. 438.)
“Civil Code section 47, subdivision 2 is a statute which confers an absolute privilege which attaches only to statements or publications, but not actions of the person invoking the privilege.” (Rosenfeld, Meyer & Susman v. Cohen (1983) 146 Cal.App.3d 200, at 234, 194 Cal.Rptr. 180; emphasis added.)
Here, since Oren has proceeded on a theory of abuse of process, the resolution of the issue of the application of the privilege requires some further analysis of that tort and the validity of the approach taken by the Court of Appeal in Asia Investment Co. v. Borowski (1982) 133 Cal.App.3d 832, 184 Cal.Rptr. 317.
At this point we think it important to point out that in each case, up to and including Asia Investment v. Borowski, in which the privilege has been held to bar an action in tort, the alleged tortious conduct consisted of the “publication” itself. (Cf. Rosenthal v. Irell & Manella, supra; Block v. Sacramento Clinical Labs, Inc., supra; Asia Investment Co. v. Borowski, supra.)
“The gist of the tort [abuse of process] is the misuse of the power of the court: It is an act done under the authority of the court for the purpose of perpetrating an injustice, i.e., a perversion of the judicial process to the accomplishment of an improper purpose. [Citations.]” (Younger v. Solomon (1974) 38 Cal.App.3d 289, 297, 113 Cal.Rptr. 113.)
In Umansky v. Urquhart (1978) 84 Cal.App.3d 368, 148 Cal.Rptr. 547, it was stated: “ ‘Process,’ interpreted broadly (see Barquis v. Merchants Collection Assn. (1972) 7 Cal.3d 94, at p. 104, fn. 4, 101 Cal.Rptr. 745, 496 P.2d 817), does include the filing of a complaint. It can mean either the original commencement of a suit or the processes issued collaterally, such as attachment.”
Thus a malicious prosecution is itself, by definition, one type of abuse of process, but the latter tort of course embraces a wider variety of conduct. Possibly this is the reason the text writers, including the drafters of the Restatement of Torts, in describing the tort of abuse of process, appear to have focused on the improper use of process after its issuance rather than the institution of proceedings or the procurement of process for an improper purpose.
As earlier noted, in an action for malicious prosecution, it is the institution of the proceedings which constitutes the tortious conduct. An analysis of what precisely constitutes the tortious conduct in other types of abuse of process cases is a necessary prelude to a determination of the effect of a claim of privilege under Civil Code section 47(2).
Restatement of Torts, Second, section 682 provides: “One who uses a legal process, whether criminal or civil, against another primarily to accomplish a purpose for which it is not designed, is subject to liability to the other for harm caused by the abuse of process. Comment: a. The gravamen of the misconduct for which the liability stated in this Section is imposed is not the wrongful procurement of legal process or the wrongful initiation of criminal or civil proceedings; it is the misuse of process, no matter how properly obtained, for any purpose other than that which it was designed to accomplish․ The subsequent misuse of the process, though properly obtained, constitutes the misconduct for which the liability is imposed under the rule stated in this Section.”
Dean Prosser in his work declares: “Some definite act or threat not authorized by the process, or aimed at an objective not legitimate in the use of the process, is required; ․ The improper purpose usually takes the form of coercion to obtain a collateral advantage, not properly involved in the proceeding itself, such as the surrender of property or the payment of money, by the use of the process as a threat or a club. There is, in other words, a form of extortion, and it is what is done in the course of negotiation, rather than the issuance or any formal use of the process itself which constitutes the tort.” (Prosser on Torts (2d ed.) p. 667.)
The foregoing suggests that the threat, extortionate demand, or other improper conduct “in the course of negotiation” is the tortious act to which liability attaches. The above quoted language appears to be in direct conflict with the Asia court's rationale.
It occurs to us, however, that the uttering of a hollow threat or extortionate demand without the backing of a pending law suit or the issuance of some form of judicial process could not result in any actual damage.
The leading case on the tort of abuse of process is Spellens v. Spellens (1957) 49 Cal.2d 210, 317 P.2d 613. There an action was pending between a husband and wife concerning the validity of their marriage and a determination of their property rights.
Husband filed a separate action to recover possession of some personal property from the wife and obtained a writ for claim and delivery. When the writ was executed, and while the sheriff was in possession of the property, husband offered to drop the action if the wife would drop her action concerning the validity of the marriage.
The Supreme Court, citing with approval the above quoted language from the Restatement of Torts, held that there was an abuse of process in using the claim and delivery action not to obtain property to which husband may or may not have been entitled, but to coerce the wife into dropping her action.
Our analysis of Spellens v. Spellens (1957) 49 Cal.2d 210, 317 P.2d 613, is that it was not the husband's oral offer to drop his action which constituted the tortious conduct which in turn caused damage to the wife. The wrong done was the initiation of the action and the seizure of the property by execution of the writ, all for the improper purpose of coercing the wife into dropping her lawsuit. The husband's offer was evidence of that improper purpose.
In analyzing the tort vis-a-vis the Asia rationale and a claim of privilege, we conclude that the tort may be viewed as consisting of the filing of an action or the procurement and execution of collateral process when done for an improper purpose and that any threats, coercion or conduct occurring in the course of negotiations which seek an improper collateral advantage, are admissible as evidence to prove the existence of the improper purpose.
“The privileges of Civil Code section 47, unlike evidentiary privileges which function by the exclusion of evidence (see Evid.Code, § 900 et seq.), operate as limitations upon liability.” (Block, supra, 131 Cal.App.3d at p. 389, 182 Cal.Rptr. 438; emphasis added.)
We view the tort of abuse of process, including malicious prosecution, and the privilege created by Civil Code section 47(2) as two sides of the same coin. The acts of initiating an action, procuring process and executing said process, as well as all pleadings and publications having a logical relation thereto, filed or uttered to achieve the object of the litigation are privileged so long as the court's processes are used for a proper purpose. On the other hand, the use of the court's process for an improper purpose is tortious and unprivileged.
It would be a rare case in which an ulterior purpose or the intent to abuse process would be discernable from the face of a pleading or application for the issuance of process. Necessarily proof of the ulterior purpose or intent to misuse the process of the court will generally rest in statements of the defendant or his counsel as was the case in Spellens v. Spellens, supra.
If such statements were held to be privileged and inadmissible as evidence, the tort of abuse of process would be effectively abolished. Our analysis of the role of the privilege leads us to analogize to the two forms of immunity recognized in the criminal law.
When the publication itself is alleged to be the tortious conduct as in Rosenthal v. Irell & Manella, supra, and cases cited therein, the privilege creates a “transactional immunity.” Where, however, the alleged tortious conduct is something other than the publication itself, then the publication may be used as evidence bearing on the tortious nature of that conduct. In other words, Civil Code section 47(2) does not provide an immunity from “use” of the publication.
In the case at bench the actionable wrong consisted of Stanman's filing of the CEQA action and employing all of the corollary procedural devices attendant on that action which caused damage to Oren. That action was found to be meritless. The issue then is whether Stanman and his counsel intentionally misused the process of the court by using the CEQA action for the purpose of extorting money or property from Oren rather than achieve the appropriate objective of such an action.
It seems clear to us that the purpose of a CEQA action is to permit a private individual, essentially in the public interest, to insure that environmental issues are considered by a government agency before approving certain land development. Such an action is not designed, even if successful, to bring monetary reward or personal gain to the individual instituting the action.
Whether this case be viewed as one for abuse of process, which it is, or malicious prosecution, which it could have been, it is our opinion that the statements of Stanman and his counsel and the several demands made by them on Oren are not privileged and ergo are admissible as evidence to establish malice, lack of probable cause, and/or an improper purpose in instituting and maintaining the CEQA action.
The judgment is reversed and the matter is remanded to the trial court with directions to enter an order denying defendants' motion for summary judgment.
1. The summary judgment was entered pursuant to a peremptory writ of mandate issued by this court after the trial court had denied defendant's motion. In denying plaintiff's petition for a hearing in the matter, the Supreme Court indicated that such denial was “without prejudice” to plaintiff's right to appeal from the summary judgment. This appeal ensued and we have concluded that the peremptory writ was improvidently issued.
2. We previously denied a petition for a peremptory writ by Stanman seeking summary judgment in his favor. The action apparently is still pending against him and the law firm of Rasch and Golob and attorney Edward B. Rasch.
COMPTON, Acting Presiding Justice.
BEACH and GATES, JJ., concur.