FEBRUARY 3, 2003 VOLUME 10, NUMBER 31
Non-lawyers often think of legal proceedings as a sort of chess game played with legal theories. Lawyers, unfortunately, sometimes fall into the same pattern of thinking. Pleadings can be filed and arguments made not on the basis of the evidence, but in pursuit of tactical advantage or improved bargaining position.
S. Felton Mitchell, Jr., a lawyer and CPA in Mobile, Alabama, should probably have known better than to file the pleadings he did. He had been appointed administrator of the estate of William M. Cagle, Jr., who had died in 1997. Mr. Cagle and two other men had been a developer and manager of shopping centers, and his estate included a partnership interest in that business. It also included over $400,000 of debt to the partnership.
After Mr. Cagle’s debt had been satisfied (by withholding his share of distributions for a period of time), Mr. Mitchell filed an objection to the claim by the partnership. He also filed a lawsuit against the business, arguing that a partnership amendment signed by Mr. Cagle before his death had been procured by fraudulent means.
Mr. Mitchell filed this action, as he later admitted, without any actual knowledge of or information about Mr. Cagle’s mental condition at the time, or of any promises or misrepresentations that might have been made. In other words, he apparently filed the action just to preserve the estate’s options until he could obtain information about the events, or to improve the estate’s negotiating position.
The problem with taking such a step is that it can be construed as malicious prosecution—a lawsuit filed for harassment or other purposes rather than to recover on a legitimate claim—and that’s just what happened in this case. A jury awarded the partnership $51,918.40 in damages (the amount of their costs and attorney’s fees), plus an additional $103,836.80 in punitive damages—the latter intended to punish Mr. Mitchell for filing the unsupported lawsuit.
The Alabama Supreme Court agreed that Mr. Mitchell should be responsible to pay the entire judgment. There is a strong legal bias against the validity of malicious prosecution suits, based on the notion that legitimate claimants should not be scared away from the courthouse by concern about the possibility of being counter-sued for malicious prosecution. In this case, however, the jury found that Mr. Mitchell knew that his claims were baseless for months before the trial, and the state’s high court saw no reason to let him off the hook. Mitchell v. Folmar & Associates, LLP, January 10, 2003.