Opinion ID: 2512331
Heading Depth: 3
Heading Rank: 3

Heading: Possible consequences from recognizing the tort of malicious defense

Text: As stated above, only one jurisdiction has recognized the tort of malicious defense. [13] See Aranson, 671 A.2d at 1033 (Thayer, J., dissenting) (citations omitted); California Physicians' Serv. v. Superior Court, 9 Cal. App.4th 1321, 1325, 12 Cal.Rptr.2d 95, 96 (1992) (Broadly but nevertheless accurately speaking, there is no tort of `malicious defense.' (citing Bertero, 13 Cal.3d at 52, 529 P.2d at 615, 118 Cal.Rptr. at 191)); Wilkinson, 4 P.3d 1149 (declining to adopt or recognize the tort of malicious defense in spite of Aranson, and concluding that if such is deemed desirable or needed, action by the legislature is required, especially ... in light of [the court's] long-standing recognition of the law to the contrary); Baxter v. Brown, 83 Kan. 302, 111 P. 430, 431 (1910) (noting that the tort of malicious prosecution is recognized, but that the court has failed, however, to find any authority for assessing damages for a malicious defense of an action); cf. Levinson v. Citizens Nat'l Bank of Evansville, 644 N.E.2d 1264, 1268 (Ind.Ct. App.1994) (holding that parties to a lawsuit do not owe each other a duty to refrain from causing a mistrial, and observing that [t]rying a case is often a mental as well as physical challenge requiring attention to every detail. The parties should not have the additional burden of worrying whether an improper question or answer or some other event will inspire another round of litigation); Wong v. Tabor, 422 N.E.2d 1279, 1283 (Ind.Ct.App.1981) (The tort of malicious prosecution is not generally favored in our legal system, and thus its requirements are construed strictly against the party bringing the action.). Based on the following consequences of the recognition of this tort, we believe it is appropriate to join the majority of courts that have addressed this issue and decided not to recognize the tort of malicious defense.
In declining to recognize the tort of malicious defense, we note that the malicious defense standard is not parallel to the three-part standard this jurisdiction follows for the tort of malicious prosecution. To sustain a claim for malicious prosecution, a plaintiff must show that the defendant initiated the prior lawsuit with malice, which this court has defined as [t]he intent, without justification or excuse, to commit a wrongful act[,] reckless disregard of the law or of a person's legal rights[,] and [i]ll will; wickedness of heart. Awakuni v. Awana, 115 Hawai`i 126, 141, 165 P.3d 1027, 1042 (2007) (quoting Black's Law Dictionary 976 (8th ed.2004)). [T]he emphasis is upon the misuse of criminalÔÇöand sometimes civilÔÇöactions as a means for causing harm. Prosser and Keeton on Torts,  119, at 870. Young and the dissent propose a standard for the tort of malicious defense that is less strict, however, inasmuch as the tort imposes liability where the defendant acted primarily for a purpose other than that of securing the proper adjudication of the claim and defense thereto, such as to harass, annoy or injure, or to cause unnecessary delay or needless increase in the cost of litigation. See supra. We recognize that a defendant that knowingly acted without probable cause primarily to annoy the plaintiff was not merely exerting its right to conduct a vigorous defense and may be sanctioned under Hawaii's civil rules of procedure. We do not condone such defense practices. Still, we cannot take the drastic step of creating a new tort, inasmuch as the tort of malicious defense will have a chilling effect on legitimate defenses, particularly because it softens the malice standard of the tort of malicious prosecution. See Lee Craig, Malicious Defense, 13 Mealey's Litigation Report: Insurance Bad Faith 25 (Dec. 21, 1999), available at http://butlerpappas.com/showarticle.aspx? Ref=list&Show=522. As the party haled into court, the defendant has the right to vigorously defend itself against the plaintiff's claims. [V]igorous and zealous advocacy is a necessary component of our judicial system. Office of Disciplinary Counsel v. Breiner, 89 Hawai`i 167, 171, 969 P.2d 1285, 1289 (1999); see also In re Attorney's Fees of Mohr, 97 Hawai`i 1, 7, 32 P.3d 647, 653 (2001) (adopting the policy of requiring counsel to remain an advocate for the client and declining to impose sanctions on court-appointed attorneys so long as their arguments on appeal reflect zealous advocacy on behalf of their clients); Preamble, Hawai`i Rules of Professional Conduct, [2] (As a representative of clients, a lawyer performs various functions.... As advocate, a lawyer zealously asserts the client's position under the rules of the adversary system.). The creation of the tort of malicious defense and recognizing potential liability for defendants would jeopardize this important right: the tort may have a chilling effect on some legitimate defense and perhaps drive a wedge between defendants seeking zealous advocacy and defense attorneys who fear personal liability in a second action. Aranson, 671 A.2d at 1032 (Thayer, J., dissenting). The risk of compromising a defendant's right to vigorous and zealous advocacy by virtue of the threat of a subsequent lawsuit appears too great to justify the recognition of the tort of malicious defense. See infra. In the context of the litigation privilege, we addressed the consequences of the threat of liability in subsequent lawsuits: [L]iability in subsequent proceedings tends to discourage parties from turning to the courts where an irreconcilable conflict exists. In this manner, the chilling effect resulting from the threat of subsequent litigation hinders access to the courts, which undermines the courts' role in resolving disputes and vindicating rights. Given the importance of access to the courts, the policy of avoiding the chilling effect resulting from the threat of subsequent litigation generally favors limiting liability in subsequent proceedings. Matsuura v. E.I. du Pont de Nemours and Co., 102 Hawai`i 149, 157, 73 P.3d 687, 695 (2003). Cf. Prosser and Keeton on Torts,  120, at 889-90 (observing that malicious prosecution claims have a chilling effect on honest litigants); Laing v. Shanberg, 13 F.Supp.2d 1186, 1189 (D.Kan.1998) ([M]alicious prosecution causes of action have long been disfavored in the law because they tend to discourage individuals from seeking redress in the courts.); Dickinson v. Echols, 578 So.2d 1257, 1258 (Ala.1991) (explaining that `[p]ublic policy requires that all persons shall [be able to] resort freely to the courts for redress of wrongs and to enforce their rights, and that this may be done without the peril of a suit for damages in the event of an unfavorable judgment by jury or judge'); Paul v. Nat'l Educ. Ass'n, 189 N.J.Super. 265, 459 A.2d 1213, 1214 (1983) (noting that malicious prosecution suits tend to chill free access to the courts). Thus, in our view, recognizing the derivative tort of malicious defense is not justified because it would result in chilling legitimate defenses.
Deriving the tort of malicious defense from the tort of malicious prosecution would plainly ignore a defendant's legal position and rights. A successful defendant, involuntarily haled into court without probable cause and with malice, seeks to recover compensation for defending itself against malicious and meritless claims. On the other hand, a plaintiff that prevailed in the initial lawsuit seeks damages for malicious defenses that were raised merely to resist the claim of a plaintiff already before the court. Aranson, 671 A.2d at 1032 (Thayer, J., dissenting). Ritter v. Ritter, 381 Ill. 549, 46 N.E.2d 41 (1943), which held that a successful plaintiff is not entitled to recover attorneys fees and expenses against the unsuccessful defendant in a second action without statutory authorization, illustrated why permitting a plaintiff to bring a second lawsuit against an unsuccessful defendant is problematic. When a plaintiff's claim succeeds, that usually means that the defendant engaged in wrongful conduct: If the plaintiff is successful in the suit, the probability is that the conduct of the defendant causing the suit was wrongful. When a defendant breaches a lease, violates the terms of a contract, commits a tort, misrepresents goods sold, unlawfully retains the personal property of the plaintiff, or remains in possession of real estate after the expiration of his tenancy, necessitating proceedings, his conduct is wrongful and may require a suit against him by the plaintiff. Id. at 555, 46 N.E.2d at 44. Yet, [t]he defendant ha[s] the right to resist [a plaintiff's] claim and if [the] plaintiff[] wished to establish [its] right it was necessary for [it] to resort to litigation. Id. at 554, 46 N.E.2d at 44. Based on the nature of the tort and the circumstances that often give rise to a claim for malicious defense, we cannot agree that it is appropriate to recognize this tort. Furthermore, by initiating the lawsuit, the plaintiff must be held to accept, to some degree, the costs and risks of litigation. Aranson, 671 A.2d at 1032 (Thayer, J., dissenting); see also Eastin v. Bank of Stockton, 66 Cal. 123, 127, 4 P. 1106, 1109-10 (1884) (The plaintiff sets the law in motion; if he does so groundlessly and maliciously, he is the cause of the defendant's damage. But the defendant stands only on his legal rights,ÔÇöthe plaintiff having taken his case to court, the defendant has the privilege of calling upon him to prove it to the satisfaction of the judge or jury, and he is guilty of no wrong in exercising this privilege. (citation and internal quotation marks omitted)). In rejecting the tort of malicious defense, Justice Thayer pointed out that in the tort of malicious prosecution, the defendant seeks damages for harms suffered directly because of the plaintiff's initiation of the lawsuit. Aranson, 671 A.2d at 1032 (Thayer, J., dissenting). On the other hand, [t]he plaintiff who encounters a malicious defense voluntarily entered the judicial system. Id. When this plaintiff ultimately prevails in the action, at best only a portion of the plaintiff's litigation costs and damages can be attributed to the malicious defense. Id. (Emphasis added.) Unfortunately, litigation has a profound effect upon the quality of one's life that goes beyond the mere entitlement to counsel fees. Aranson, 671 A.2d at 1028; see also dissenting opinion at ___, 198 P.3d at 695-96. Nevertheless, remedying the plaintiff's harm suffered solely from the lawsuit in a subsequent lawsuit is outweighed by the chilling effect that the tort of malicious defense would have on legitimate defenses, particularly where the plaintiff's harms are compensated by existing rules and statutes.
As Justice Thayer also recognized, a tort of malicious defense may threaten the rule that an attorney at law is absolutely privileged to publish defamatory matter concerning another in communications preliminary to a proposed judicial proceeding, or in the institution of, or during the course and as a part of, a judicial proceeding in which he participates as counsel, if it has some relation to the proceeding. Aranson, 671 A.2d at 1032 (Thayer, J., dissenting); McCarthy v. Yempuku, 5 Haw.App. 45, 48-49, 678 P.2d 11, 14 (1984) (quoting Restatement  586). [T]he protection is complete irrespective of the motive prompting the use of the words or writings, but the privilege does not extend to matters having no materiality or pertinency to the question involved in the suit. Ferry v. Carlsmith, 23 Haw. 589, 591 (Terr.1917) (emphasis added). See also Restatement  586 comment a ([The absolute privilege] protects the attorney from liability in an action for defamation irrespective of his purpose in publishing the defamatory matter, his belief in its truth, or even his knowledge of its falsity.). In Kahala Royal Corp., 113 Hawai`i at 268, 151 P.3d at 749, this court observed the following policies associated with the litigation privilege: (1) promoting the candid, objective, and undistorted disclosure of evidence; (2) placing the burden of testing the evidence upon the litigants during trial; (3) avoiding the chilling effect resulting from the threat of subsequent litigation; (4) reinforcing the finality of judgments; (5) limiting collateral attacks upon judgments; (6) promoting zealous advocacy; (7) discouraging abusive litigation practices; and (8) encouraging settlement. (Quoting Matsuura v. E.I. du Pont de Nemours & Co., 102 Hawai`i 149, 155, 73 P.3d 687, 693 (2003)) (some citations, brackets, and internal quotation marks omitted). Where the alleged misconduct consists in part of false statements made in the underlying proceedings, as in the instant case, allowing an action for malicious defense may counteract our stated polic[ies]. Aranson, 671 A.2d at 1032 (Thayer, J., dissenting). Additionally, recognizing the tort of malicious defense may result in plaintiffs seeking damages when (1) they are dissatisfied with an award in the underlying suit or (2) the defendant in the underlying action is judgment-proof and they attempt to extend liability to attorneys, their firms, and possibly, third parties. Id. The California appeals court also expressed concerned that the tort of malicious defense would invite never-ending litigation: [14] The policy of the rule is obvious. If the wrongful conduct of a defendant causing the plaintiff to sue him would give rise to an independent tort and a separate cause of action, there would be no end to the litigation, for immediately upon the entry of judgment the plaintiff would start another action.... Under our jurisprudence the defendant may present any defense... that he may have or that he may deem expedient, and in so doing he will not be subjecting himself to a second suit by the plaintiff based on the wrongful conduct of the defendant in causing the plaintiff to sue him or in defending the action. The rule is the same even though the wrongful conduct of the defendant is willful, intentional, malicious or fraudulent. California Physicians' Service, 9 Cal.App.4th at 1325 n. 2, 12 Cal.Rptr.2d at 97 n. 2 (quoting Ritter, 46 N.E.2d at 44). In our view, it is simply unnecessary to risk the foregoing consequences that may arise from recognizing the tort of malicious defense when viable alternatives exist.