Posts Tagged ‘malicious prosecution’

Malicious Prosecution Case Against Lawyers Dismissed

NOVEMBER 24, 2003 VOLUME 11, NUMBER 21

Sherry Zachary was sure that her brother Raymond had taken advantage of their mother. She was so sure that she hired California lawyers John L. Guth and Jeffrey T. Stromberg to file a lawsuit against Raymond. Eventually Raymond sued the lawyers—though not successfully.

The first lawsuit filed by Sherry’s attorneys was over the transfer of the family farm to Raymond shortly before the death of their mother, Miriam Zachary. Sherry (through her attorneys) alleged that Raymond had made misrepresentations to Miriam, had unduly influenced her, and had taken advantage of Miriam’s declining mental health.

Raymond demonstrated to the court that Miriam knew what she was doing and wanted him to have the farm, and the first lawsuit was dismissed a year after it was filed. Shortly thereafter, Sherry (and her attorneys) filed a second action against Raymond, alleging that he had borrowed $25,000 from Miriam and had not repaid it to her estate. Sherry sought half of the loan amount from her brother.

Nearly two years later, Sherry and the lawyers dismissed the second lawsuit without even taking it to trial. Then Raymond filed his own lawsuit, against Sherry and her lawyers.

Raymond alleged that Sherry’s lawyers should have known that her claims were groundless. If they did not actually know there was no basis, argued Raymond, they could have done a little checking and determined that the lawsuits should not have been filed in the first place. Failure to check up on the merits of the case before filing, Raymond insisted, amounted to malicious prosecution.

Lawyers Guth and Stromberg asked the court to dismiss the lawsuit, arguing that there was no evidence they actually knew the lawsuits were without merit. The trial court dismissed the complaints against the lawyers, and the California Court of Appeals agreed.

The appellate court ruled that it would be unreasonable to require lawyers to do their own full investigation before filing lawsuits on behalf of their clients. The standard for judging a lawyer’s behavior in these circumstances, ruled the court, is whether a reasonable lawyer would have thought Sherry’s claims were tenable. Zachary v. Gluth, November 7, 2003.

Even if a lawyer is not required to fully investigate a client’s claims before filing a lawsuit, no lawyer is permitted to file any pleading for an “improper purpose.” Arizona rules allow sanctions against a lawyer who files a complaint or motion as harassment, to increase costs or delay legal proceedings.

Attorney Managing Estate Sued For Malicious Prosecution

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.

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