VIRGIL D. DUTT, Appellant and Cross-Respondent, v. RICHARD E. KREMP, M.D.; RAYMOND L. SWARTS, M.D.; PAUL S. CLARK, M.D.; and DAVID C. JOHNSON, M.D., Respondents and Cross-Appellants
Dutt v. Kremp
Young, J., concur.
VIRGIL D. DUTT, Appellant and Cross-Respondent, v. RICHARD E. KREMP, M.D.; RAYMOND L. SWARTS, M.D.; PAUL S. CLARK, M.D.; and DAVID C. JOHNSON, M.D., Respondents and Cross-Appellants.
VIRGIL D. DUTT, Appellant and Cross-Respondent, v. RICHARD E. KREMP, M.D.; RAYMOND L. SWARTS, M.D.; PAUL S. CLARK, M.D.; and DAVID C. JOHNSON, M.D., Respondents and Cross-Appellants.
No. 22329
December 22, 1992
844 P.2d 786
Wait & Shaffer, Reno and Lillick & Charles and Tristam B. Brown and James J. Corbelli, San Francisco, for Appellant/ Cross-Respondent.
Carl M. Hebert, Reno, for Respondents/Cross-Appellants.
OPINION
By the Court,
Mowbray, C. J.:
THE FACTS
In the winter of 1985, respondents, physicians affiliated with Saint Mary's Hospital in Reno, treated Jack Rentnelli for a brain illness. Believing that he had not received proper medical care from respondents, Rentnelli contacted appellant Virgil Dutt, an attorney, about bringing a medical malpractice lawsuit.
Appellant and his legal assistant evaluated Rentnelli's claim, interviewing Rentnelli and his family members, obtaining and reviewing Rentnelli's medical records, and researching pertinent medical and legal authorities. Appellant also spoke with another attorney, experienced in medical malpractice litigation, who told him that Rentnelli's claim had merit. Ultimately concluding that there were grounds to bring a medical malpractice action, appellant filed a complaint against respondents.
In response to the complaint, appellant received a letter from respondent Dr. David C. Johnson in which Dr. Johnson vigorously defended the medical treatment given to Rentnelli and opined that the malpractice claim was groundless. Dr. Johnson also warned appellant that if Rentnelli should further pursue the claim, he would consider such action to be an abuse of process and "unreasonable litigation."
Appellant answered Dr. Johnson with a letter of his own, in which he replied, "I have become aware that there exist several services which analyze a medical malpractice case and advise whether or not we are completely off base. I am in the process of selecting one of these organizations and will be more than happy to abide by their advice." In accordance with this letter, appellant submitted the records of Rentnelli's treatment to the Medical Quality Foundation.
On September 11, 1986, the Medical Quality Foundation produced a report concluding that "no provable negligence" could be found in respondents' treatment of Rentnelli. Appellant, with the consent of Rentnelli, then voluntarily dismissed the complaint.
In spite of this dismissal, respondents filed a complaint for malicious prosecution and abuse of process against appellant and Rentnelli. After a flurry of pre-trial motions, trial began on August 20, 1990. At the close of respondents' case in chief, Rentnelli and appellant moved for involuntary dismissals; the trial court granted Rentnelli's motion but denied appellant's. On August 29, 1990, the jury returned a verdict for respondents, and the district court entered judgment accordingly. After denying several post-trial motions brought by the parties, the district court entered an amended judgment on March 7, 1991. This appeal and cross-appeal followed.
DISCUSSION
I. MALICIOUS PROSECUTION
A. Probable Cause
The elements that must be proved in a malicious prosecution action are the following: (1) a lack of probable cause to commence the prior action; (2) malice; (3) favorable termination of the prior action; and (4) damages. See Chapman v. City of Reno, 85 Nev. 365, 455 P.2d 618 (1969). The first question presented in this appeal is whether, as appellant contends, the trial court erred by refusing to rule on the issue of probable cause.
When there is no dispute as to the facts upon which an attorney acted in filing the prior action, the question whether there was probable cause to institute the prior action is purely a legal question to be answered by the court. Bonamy v. Zenoff, 77 Nev. 250, 362 P.2d 445 (1961). In Sheldon Appel Co. v. Albert & Oliker, 765 P.2d 498, 504 (Cal. 1989), the California Supreme Court offered a persuasive rationale for the requirement that the court, rather than the jury, determines the existence of probable cause:
The question whether, on a given set of facts, there was probable cause to institute an action requires a sensitive evaluation of legal principles and precedents, a task generally beyond the ken of lay jurors, and courts have recognized that there is a significant danger that jurors may not sufficiently appreciate the distinction between a merely unsuccessful and a legally untenable claim. To avoid improperly deterring individuals from resorting to the courts for the resolution of disputes, the common law affords litigants the assurance that tort liability will not be imposed for filing a lawsuit unless a court subsequently determines that the institution of the action was without probable cause.
Here, because the facts upon which appellant relied in filing the prior action are undisputed, the existence of probable cause was a purely legal question which should have been answered explicitly by the district court. Yet, despite appellant's repeated requests that it rule on the existence of probable cause, the district court refused to take the issue from the jury. Instead, the district court submitted the issue to the jury, as evidenced by the following jury instruction:
In a malicious prosecution action against an attorney, the test for "probable cause" is an objective one. Significant issues include what facts were known to the attorney, and whether those facts made the lawsuit tenable. The attorney's subjective belief as to the merits of the case is relevant and admissible on the issue of malice.
We hold that the district court erred in submitting the issue of probable cause to the jury.
Nevertheless, because the existence of probable cause is a purely legal question and the material facts have been fully developed in the trial court and are undisputed, we need not remand this matter to the district court for a determination. See Nyberg v. Kirby, 65 Nev. 42, 67-68, 188 P.2d 1006, 1018 (1948), reh'g denied, 65 Nev. 78, 193 P.2d 850 (1948). Instead, we shall resolve the determinative legal question here on appeal. See Pink v. Busch, 100 Nev. 684, 691 P.2d 456 (1984).
This court has not yet enunciated a test for determining whether the facts known to the attorney constitute probable cause for filing the underlying action. After considering the approaches of other jurisdictions, we have concluded that the test set forth by the California Supreme Court in Sheldon Appel Co. is most appropriate. Under this test, when the facts known by the attorney are not in dispute, the court must determine whether, on the basis of these facts, any reasonable attorney would have thought that the institution of the prior action was legally tenable. Sheldon Appel Co., 765 P.2d at 511 (emphasis added). The standard is an objective one; it does not permit the court to consider whether the attorney subjectively believed that the prior action was legally tenable. Moreover, the adequacy of an attorney's research is not relevant to the probable cause determination, id. at 510, and an attorney is entitled to rely entirely on what his client told him when deciding whether there is probable cause to file a lawsuit. Lucero v. Stewart, 892 F.2d 52, 54 (9th Cir. 1989) (construing Sheldon Appel Co.). We adopt the Sheldon Appel Co. test for our jurisdiction, and, in doing so, we reaffirm the principle that an attorney's role is to facilitate access to our judicial system for any person seeking legal relief.
We conclude that, under the Sheldon Appel Co. test, a reasonable attorney, relying upon facts learned from reviewing Rent-nelli's medical records, researching medical literature, and interviewing Rentnelli and his son, could have concluded that a tenable claim of medical malpractice existed against respondents.
B. Malice
As noted above, malice is an element of a cause of a malicious prosecution action. Although the existence of probable cause is fatal to respondents' malicious prosecution claim, we believe that a discussion of malice would be useful to the parties, our lower courts and our practitioners.
Appellant contends that there was insufficient evidence to support the jury's finding that he acted with malice and that therefore his motion for judgment notwithstanding the verdict should have been granted. According to appellant, the record contains no evidence suggesting that he sought anything other than a full adjudication of Rentnelli's claim. Moreover, appellant submits, the absence of malice is demonstrated by his dismissal of the malpractice action when he became convinced that there was no basis for the lawsuit. We are persuaded by appellant's argument.
The malice element of malicious prosecution relates to the subjective intent or purpose with which the defendant acted in initiating the prior action; and the defendant's motivation is a question of fact to be determined by the jury. Sheldon Appel Co., 765 P.2d at 503. The Restatement (Second) of Torts § 676 (1977) defines the malice element as "propriety of purpose":
To subject a person to liability for wrongful civil proceedings, the proceedings must have been initiated or continued primarily for a purpose other than that of securing the proper adjudication of the claim on which they are based.
Under the Sheldon Appel Co. formula, the extent of a defendant attorney's investigation and research is relevant to the question of whether the attorney acted with malice. Sheldon Appel Co., 765 P.2d at 510.
We find the record bereft of direct evidence from which the jury could conclude that appellant acted with malice. As respondents correctly observe, however, malice may be inferred from proof showing a lack of probable cause. See Chapman, 85 Nev. at 369, 455 P.2d at 620. Even so, we believe that to infer malice from the evidence showing a lack of probable cause, the defendant's pre-filing behavior must have been clearly unreasonable. See Grindle v. Lorbeer, 242 Cal.Rptr. 562 (Cal.Ct.App. 1987).
In Grindle, before filing the underlying lawsuit for negligent operation of a golf cart, the defendant attorney reviewed a file and a memo prepared by a law clerk summarizing the facts of the case; the attorney also relied on his own knowledge of golf carts. Although the court concluded that the attorney might have been careless, it also concluded that the research was adequate and that there was no evidence of indifference or malice. Id. at 566. In addition, the court declined to infer malice because the attorney dismissed the case almost immediately after determining that it lacked merit. The court concluded that the attorney's conduct was consistent with a finding that he filed the lawsuit in the good faith belief that it had merit, and discontinued it upon realizing that it lacked merit. Id.
Like the defendant attorney in Grindle, appellant in the present case reviewed his client's file, conducted research and dismissed the case soon after discovering that it lacked merit. Appellant also interviewed Rentnelli's family members and spoke with an attorney experienced in medical malpractice litigation. If anything, appellant's investigation was more thorough than that of the attorney in Grindle. Thus, we hold that the evidence does not support an inference that appellant acted with malice.
II. Abuse of Process
At the close of trial, appellant moved for a directed verdict and for judgment notwithstanding the verdict or, in the alternative, for a new trial on the grounds that there was no evidence to support a verdict in favor of respondents on their abuse of process claim. The trial court denied these motions, and appellant contends that the court erred in doing so. We agree with appellant.
An abuse of process claim consists of two elements: (1) an ulterior purpose other than resolving a legal dispute, and (2) a willful act in the use of process not proper in the regular conduct of the proceeding. Kovacs v. Acosta, 106 Nev. 57, 787 P.2d 368 (1990). An "ulterior purpose" is any "improper motive" underlying the issuance of legal process. Laxalt v. McClatchy, 622 F.Supp. 737, 751 (D.Nev. 1985). At trial, respondents assigned two improper motives to appellant.
Respondents first argued that appellant and Rentnelli filed the malpractice action in an effort to avoid paying the bill for medical services provided by respondents. In our view, however, the evidence marshalled by respondents in support of this argument is not persuasive. Moreover, as appellant correctly contends, a desire to avoid paying fees for what are, at the time, perceived to be negligent medical services is not an improper motive. Finally, this improper motive, if it existed at all, was more Rentnelli's than appellant's and, as noted above, the trial court granted Rentnelli's motion for involuntary dismissal.
Respondents also asserted that appellant filed the malpractice action to coerce a nuisance settlement. See Bull v. McCuskey, 96 Nev. 706, 615 P.2d 957 (1980), overruled in part on other grounds by Ace Truck v. Kahn, 103 Nev. 503, 746 P.2d 132 (1987). According to respondents, this improper motive was demonstrated by appellant's attempt, after obtaining the Medical Quality Foundation's report, to negotiate a settlement with the lawyer for one of the respondents. Again, however, we find respondents' evidence unconvincing. Unlike the defendant attorney in Bull, appellant made no formal demand for settlement and presented no specific monetary figures. Indeed, appellant dismissed the complaint shortly after receiving the Medical Quality Foundation's report. Thus, we conclude that there is insufficient evidence to support a finding that appellant filed the malpractice action to coerce a nuisance settlement.
Because we hold that appellant harbored no ulterior purpose other than resolving Rentnelli's apparent malpractice dispute with respondent, we need not consider the second element of an abuse of process claim, namely, whether appellant engaged in a willful act in the use of process not proper in the regular conduct of the proceeding.
The dissenting author's advocacy on behalf of the medical establishment, while characteristically turgid, is laudable, as are his past efforts on behalf of gaming concerns, business and industry, and assorted insurance companies. One is nigh moved to tears by these chronicles of destitution, misery and exploitation of the privileged few by the wicked little people.
Mr. Justice Steffen, the world is not as you see it. I remind you that all persons — not just society's "winners" — are equal before the judicial courts of this land. I also urge you to open your eyes to the practical consequences of your rarified legal analysis; People suffer unjustly when they are fired from their jobs for little or no reason or when they are denied insurance coverage based on an arcane reading of some hidden policy exclusion. With respect to the rule you advocate today, it would undoubtedly discourage ordinary citizens from bringing a civil wrong to a court's attention or, for that matter, reporting criminal conduct. Finally, I suggest to you that the judicial task requires far more than sterile analytic skill; one needs compassion, humility, grace and, at times, mercy and the ability to forgive. In short, the judicial craft, as well as the law itself, demands a heart.
CONCLUSION
For the reasons set forth above, we reverse the judgment entered below, and we remand this case to the district court for entry of judgment in favor of appellant.
Young, J., concur.
The jury awarded $15,000.00 to Dr. Swarts, $5,000.00 to Dr. Johnson, $15,000.00 to Dr. Kremp, and $5,000.00 to Dr. Clark.
A person may also be held liable for malicious prosecution for wrongfully continuing a civil proceeding without probable cause. Nelson v. Miller, 607 P.2d 438, 443 (Kan. 1980). This theory was presented to the jury below, and respondents contend that the jury's verdict can be sustained on the basis of this theory.
We disagree. The evidence adduced below does not support a finding against appellant on this theory. Appellant received the Medical Quality Foundation's report on September 16, 1986, and the very next day, he prepared a stipulation for dismissal. Moreover, after receiving the report, appellant neither initiated further proceedings in the case nor conveyed any formal settlement demands to respondents. In our view, this evidence conclusively shows that appellant discontinued the proceedings once he learned that there was no probable cause for Rentnelli's malpractice claim.
On the cross-appeal, respondents contend that the district court erred both in denying their motion to pass Rentnelli's costs on to appellant and in rejecting their amended memorandum of costs. These contentions are now moot, given that respondents, because of our reversal of the judgment entered below, are no longer the prevailing parties.