HUENE v. CARNES (1981)

Plaintiffs Donald R. Huene, a physician, and Donald R. Huene, M.D., his professional corporation, appeal a summary judgment in favor of defendants Thomas Carnes, an attorney, and his law firm, Carnes & Bailey, in an action for malicious prosecution.   We reverse in part.

The present action arose out of an earlier civil suit for personal injuries filed against plaintiff Huene and others by defendants Carnes and his law firm on behalf of Terry Johnson.   The undisputed facts of the personal injury action were that in September 1974, after Johnson had been run over by an automobile, he was taken to Fresno Community Hospital, where plaintiff Huene selected and inserted an intermedullary rod to reduce a fracture of Johnson's femur.   Initially, the fracture appeared to be healing normally, but at some point Johnson began experiencing discomfort in his leg.   In April 1975 he informed Huene about the problem.   Huene took an x-ray, which revealed that the rod had broken.   Subsequently Huene surgically removed the rod, replaced it with a new one, and suggested that Johnson consider suing its manufacturer.   Shortly thereafter, Johnson contacted a Fresno law firm about a possible lawsuit.   The Fresno firm referred the matter to defendant Carnes & Bailey, a San Francisco law firm experienced in personal injury and products liability litigation.   Thereafter, Johnson forwarded various medical and hospital statements to Carnes & Bailey, and in June 1975 he sent the firm a letter stating, inter alia, his desire to “make the company that made the rod pay for doing [him] wrong.”   In August 1975 Johnson contracted with the law firm to prosecute his claim for damages arising out of medical malpractice for a fee of 50 percent of all amounts received by settlement or judgment after reimbursement of the attorneys for costs of investigation and prosecution.

On 29 August 1975 in Fresno Superior Court the Carnes firm filed a complaint which named as defendants the driver of the vehicle which ran over Johnson, the owners of the vehicle, Fresno Community Hospital, Donald R. Huene, and the manufacturer and distributor of the intermedullary rod.   Donald R. Huene, M.D., Inc. was not named as a defendant in this action, and Huene individually was not served with a copy of the summons and complaint.   He first learned about the action when he contacted the manufacturer of the rod on another matter.   On 1 December 1977 the action was dismissed for failure to prosecute, a dismissal which qualified as favorable termination of the litigation for purposes of malicious prosecution.  (Minasian v. Sapse (1978) 80 Cal.App.3d 823, 827–828, 145 Cal.Rptr. 829.)

On 8 December 1977 Huene, both individually and as Donald R. Huene, M.D., Inc., a professional corporation, filed the present action for malicious prosecution, negligence, and breach of contract against defendant attorneys herein and Johnson.   Defendants successfully demurred to the negligence and breach of contract counts and thereafter moved for summary judgment on the malicious prosecution count.   In November 1979 the trial court entered summary judgment for defendants, a judgment which plaintiffs have appealed.

 1. We note that Huene's professional corporation was never named a party in the underlying action and, so far as the record reflects, was never sued.   No showing was made that the corporation was the physician's alter ego or successor in interest, or that it possessed substantial identity with the physician in his professional capacity.   On the record before us, the summary judgment against Donald R. Huene, M.D., Inc., was properly entered.   The remainder of our opinion deals with plaintiff Huene's individual claim for malicious prosecution.

 2. Defendants contend the summary judgment was proper because Huene was never served with the Johnson complaint and therefore was never “prosecuted.”   We find no substance to this contention.   We do not believe a person must show service of the offending complaint in order to support an action for malicious prosecution.   The elements of the tort of malicious prosecution are generally formulated as threefold—favorable termination of the prior proceeding, lack of probable cause, and malice.  (Bertero v. National General Corp. (1974) 13 Cal.3d 43, 50, 118 Cal.Rptr. 184, 529 P.2d 608;  Weaver v. Superior Court (1979) 95 Cal.App.3d 166, 183–184, 156 Cal.Rptr. 745;  Tool Research & Engineering Corp. v. Henigson (1975) 46 Cal.App.3d 675, 682, 120 Cal.Rptr. 291.)   Defendants fail to cite any California case holding that service of process is an essential element of malicious prosecution.   Indeed, precedent is to the contrary, for in Weaver, supra, a physician's malicious prosecution action against an attorney survived a motion for summary judgment even though the physician had never been served with the complaint in the underlying action (see 95 Cal.App.3d p. 176, 156 Cal.Rptr. 745).   Logic supports this conclusion, and the mere fact that a professional has been named a defendant in a malpractice action may suffice to deter potential and present patients or clients from seeking or securing his services.   Patently, the potential for injury to the professional's reputation and business arises on the filing of the malpractice action against him, and service of process adds little to the injury.   According to Huene's complaint, the cost of his malpractice insurance increased from $6,000 in 1974 to $30,000 in 1976 as a result of the filing of defendants' action against him.   We further note that a professional who has been falsely and wrongfully libeled in a complaint has no recourse by way of an action for defamation, in that allegations contained in pleadings are absolutely privileged.  (Civ. Code, § 47, subd. 2.)   His sole remedy for a false complaint lies in a subsequent action for malicious prosecution.   We do not believe a person defamed by the filing of a malpractice action loses his one avenue of redress merely because the complaint was never served, and we decline to adopt a rule which would permit the making of false and highly damaging accusations in a complaint but deny the accused his remedy of malicious prosecution for the wrong done him.

3. Defendants next contend the motion for summary judgment was properly granted because Huene failed to prove that defendants lacked authority to name him as a party in the underlying action.   In opposing the motion for summary judgment Huene contended that Johnson never authorized the attorneys to file a malpractice action against him.   In support of his contention he filed extracts from a deposition in which Johnson stated he “specifically told [the first attorney he spoke to at defendants' firm] that under no circumstances did he want [Huene] sued.”   Huene also drew attention to Johnson's letter to the defendants—which spoke of making the rod manufacturer pay.   In reply, defendants contended that Johnson's statements conflicted with his other deposition testimony in which he said he left it to his attorney to decide whom to name as defendants.

 The purpose of summary judgment procedure is to determine whether any material issues of fact exist;  if the party opposing the motion submits evidence of such a material issue of fact, the motion must be denied.   (Chern v. Bank of America (1976) 15 Cal.3d 866, 873, 127 Cal.Rptr. 110, 544 P.2d 1310;  Blakley v. State of California (1980) 108 Cal.App.3d 971, 974, 167 Cal.Rptr. 1.)   At bench, a conflict of fact existed over the defendants' authority to name Huene as a party to the malpractice action.   This conflict involved a material issue in the cause.   We also note that Johnson himself is a named defendant in Huene's action for malicious prosecution.   Clearly, evaluation of the credibility of a key witness who has made prior inconsistent statements of fact and whose own position in the litigation is far from disinterested, presents a material issue of fact.   Such a factual issue must be resolved by trial on the merits, not by motion for summary judgment.

 4. Finally, defendants argue that even if Huene's declaration raised a factual issue regarding Johnson's authorization to name Huene as a party defendant, the issue was immaterial, in that Huene, the person who selected and inserted the rod, could have caused or contributed to its failure, and therefore he was a party it was necessary to sue.   Defendants argue that failure to name Huene as a party to the malpractice action could have precluded reliance on the doctrine of res ipsa loquitur at trial.   This argument misses the mark.   The issue is not probable cause to sue but authority to sue.   We agree that had defendants been authorized to name Huene as a defendant, it would have been proper to file an action against him.   But the mere execution of a contingent fee contract does not give an attorney carte blanche to file suit against whomsoever he pleases.   If an attorney feels he cannot adequately prosecute a claim without naming as a defendant someone he has not been authorized to sue, he has the option of declining the case.   Under no circumstances is he entitled to file an action on behalf of a client against a particular defendant without his client's express or implied authorization.   The client, not the attorney, determines the persons he will sue and with respect to whom he will assume potential liability for malicious prosecution.   In making this decision the client is the principal and the attorney merely the agent.   An attorney has no more right to sue a person without the consent of the client than does a physician to undertake a particular surgical procedure without the consent of the patient.   In our view, lack of probable cause subsumes within its meaning lack of authority to prosecute.   The mere filing by an attorney of an action against a particular defendant which is unauthorized by his client presents a prima facie case of malicious prosecution—in that an action filed without authority is filed without probable cause.   And when suit is filed without probable cause, it may be inferred it was filed with malice.  (Singleton v. Singleton (1945) 68 Cal.App.2d 681, 696, 157 P.2d 886.)   The inference is particularly strong when, as here, the attorneys have a large financial stake in the cause, and their compensation is contingent on the outcome.

 In sum, an attorney who sues without authorization of his client sues as a principal, and loses the traditional protective armor of an agent-attorney who has brought suit on behalf of a client.   Such an attorney, in addition to incurring potential liability for malicious prosecution, lays himself open to charges of champerty, maintenance, embracery, and barratry, offenses seldom prosecuted but still proscribed in Penal Code sections 158 and 159.   We do not mean to suggest the actions of defendants at bench were in any sense criminal.   We merely point out the sudden showers which may drench an attorney when he ventures out as a principal without the protective umbrella of his client.

In our view the declaration submitted by Huene in opposition to defendants' motion for summary judgment, while not a model in form, raised a triable issue of fact in respect to defendant's authorization to initiate suit against Huene for medical malpractice.   If the suit was unauthorized, probable cause was lacking, and malice could be inferred.   We therefore conclude that in respect to Huene the motion for summary judgment was improperly granted.   In so concluding we intimate no opinion on the ultimate merits of the cause.

The judgment dismissing the complaint of Donald R. Huene, M.D., Inc. is affirmed.   The judgment dismissing the complaint of Donald R. Huene is reversed.   Costs to appellant Huene.

FLEMING, Acting Presiding Justice.

COMPTON and BEACH, JJ., concur.