Loeb v. Teitelbaum

• Decision Date: 22 October 1980
• Citation: 432 N.Y.S.2d 487,77 A.D.2d 92
• Parties: Elliot LOEB et al., Appellants-Respondents, v. Carl TEITELBAUM, a/k/a Carl Baum, et al., Respondents-Appellants, et al., Defendant.
• Court: New York Supreme Court — Appellate Division

Page 487

432 N.Y.S.2d 487

77 A.D.2d 92

Elliot LOEB et al., Appellants-Respondents, v. Carl TEITELBAUM, a/k/a Carl Baum, et al.,

Respondents-Appellants, et al., Defendant.

Supreme Court, Appellate Division, Second Department.

Oct. 22, 1980.

Duer & Taylor, New York City (Arthur E. McInerney and John S. Chapman, Jr., New York City, of counsel), for appellants-respondents.

Lester, Schwab, Katz & Dwyer, New York City (Patrick A. Lyons and Steven B. Prystowsky, New York City, of counsel), for respondents-appellants.

Before HOPKINS, J. P., and LAZER, MARGETT and O'CONNOR, JJ.

LAZER, Justice.

The parties to this malicious prosecution action cross-appeal from portions of a posttrial order which (1) set aside a verdict in the sum of $150,000 compensatory and $200,000 punitive damages in favor of the plaintiff Elliot Loeb unless he stipulated to reductions to $50,000 and $25,000, respectively, and (2) set aside a verdict in the sum of $100,000 compensatory and $200,000 punitive damages in favor of the plaintiff's decedent Victor Sauers (referred to within as a plaintiff), unless he stipulated to reductions to $35,000 and $25,000, respectively. The defendants appeal from the order to the extent that it denied their posttrial motion to dismiss the complaint for failure to establish a prima facie case for malicious prosecution, failed to set aside the verdict in toto, failed to set it aside as against the weight of the credible evidence, and submitted the question of punitive damages to the jury. They also seek review of an intermediate order made at Special Term (GREENSPUN, J.) insofar as it denied their motion for summary judgment on the ground that the dismissal of the underlying criminal action for failure to prosecute was "as a matter of law" a termination favorable to the plaintiffs sufficient to support the action for malicious prosecution. The plaintiffs' appeal is from the vacatur of verdicts in their favor. We conclude that the order which granted a new trial as to damages unless plaintiffs stipulated to a reduction of damages should be further modified to the extent of reducing Loeb's damages to $17,500 compensatory and $10,000 punitive and those of Sauers to $15,750 compensatory and $10,000 punitive.

I

The plaintiffs, Elliot Loeb, a vice-president, secretary, treasurer and director of defendant Vanguard Diversified, Inc. (Vanguard), and Victor Sauers, another Vanguard vice-president (now represented by his executrix), were arrested for criminal trespass of the Vanguard premises after they were purportedly fired from their positions upon being accused of planning a company take-over and removal of defendant Carl Teitelbaum (Baum) as President and Chairman of the Board. At the trial of the malicious prosecution action, which followed dismissal of the trespass charges, the parties adduced conflicting versions of what had occurred. Loeb testified that on February 17, 1975, in response to a request to do so, he went to defendant Baum's office where the latter and Abraham Tannenbaum, a director and counsel to the corporation, were present. There he was given the choice of signing a letter of resignation as officer and director or being fired. When Loeb replied by expressing a desire to consult with counsel, he was discharged. Loeb contended that he was unaware that the gathering in Baum's office was to be a board of directors meeting, that he had neither received nor signed any waiver of notice of such a meeting, and that he was given no opportunity to defend himself at it. Baum's version of the same events was that a board of directors meeting was called at Vanguard's office at which Loeb and Tannenbaum attended as directors. Baum told Loeb that he was cognizant of the ouster plot and offered him an opportunity to resign. When Loeb declined, declaring he wished to consult counsel, Baum informed him that he was fired. Loeb never protested the propriety of the meeting and, in fact, entered into a discussion of severance pay after being notified of his termination.

Sauers' testimony as to the events of February 17, 1975 is uncontradicted. He was called to Baum's office where the latter and Tannenbaum were present and asked whether he wanted to leave employment together with Loeb. Sauers requested and was given time to think it over.

According to the minutes of the alleged board of directors meeting of February 17 (submitted in evidence by the defendants), after Loeb left the meeting, Baum was authorized to terminate the employment of any of the persons who had participated in the ouster move against him.

The next day, having first consulted with Loeb's lawyer, the plaintiffs arrived together at Vanguard's office at about 11:30 A.M. Loeb's version of what occurred was that Tannenbaum telephoned him twice and instructed him to leave the premises, after which the police arrived and arrested both plaintiffs. Sauers testified that upon his arrival he was called into Baum's office, but when he began to discuss Loeb, Baum ordered him to get out. Baum subsequently came upstairs to Sauers' office and told him he was discharged, to which Sauers retorted that he could not be fired without a board of directors meeting. Shortly afterwards, the police entered his office with Baum who said, "That's the man," and he was placed in handcuffs.

Baum had a different story. When he saw the plaintiffs arrive together that morning, he went to Sauers' office, inquired as to what was going on and was told, "Why don't you stop bothering me." He immediately informed Sauers he was fired then entreated with Loeb to leave the premises. Upon Loeb's rejection of these requests, Baum sought Tannenbaum's assistance but the latter's telephonic effort failed to convince Loeb to depart. It was then concluded that the only way to accomplish removal of the two discharged individuals was to call the police, but when the officers who arrived asked the plaintiffs to leave, the response continued to be negative. A similar request from a sergeant who was shortly called to the premises also was refused. At that point, the plaintiffs were arrested, escorted from the building, booked and arraigned. Baum signed a complaint charging them with criminal trespass.

The criminal trespass charges against the plaintiffs originally were set down for trial in the Criminal Court of the City of New York, Kings County, on April 29, 1975. On that date, all of the parties appeared and it was revealed that both Loeb and Sauers had refused the offer of an adjournment in contemplation of dismissal conditioned upon good behavior. Over their objection, the prosecutor requested an adjournment so as to enable him to interview the arresting officers who had been excused from appearing because of the possibility that the matter would be disposed of by the ACD process. The case was set down for May 12, and, over the People's objection, marked final against them despite the fact that it had not been adjourned previously.

On the morning of May 12 the Assistant District Attorney again failed to produce the arresting policemen, of whom one had the day off and the other had just completed his regular tour of duty. The prosecution was given until noon to obtain the officers' presence but when that time arrived and they were still absent the court, sua sponte, dismissed the charges for failure to prosecute. All the parties were present at each call of the criminal case, ready and willing to proceed to trial, and none consented to or sought to obtain the dismissal orders. The instant tort action followed the dismissals.

II

Relying on the elemental proposition that termination of the underlying criminal charges favorable to the plaintiff is a prerequisite of any action for malicious prosecution (see Munoz v. City of New York, 18 N.Y.2d 6, 271 N.Y.S.2d 645, 218 N.E.2d 527), the defendants moved for summary judgment arguing that the dismissals in the Criminal Court could not be deemed to constitute favorable terminations of the charges. The Special Term Justice disagreed, finding "as a matter of law" that the Criminal Court dismissals were favorable terminations. Despite case law which seems to indicate that the denial of a motion for summary judgment decides nothing beyond the existence of a fact issue (see Zook v. Hartford Acc. & Ind. Co., 64 A.D.2d 701, 407 N.Y.S.2d 570; Sackman-Gilliland Corp. v. Senator Holding Corp., 43 A.D.2d 948, 351 N.Y.S.2d 733; but see Siegel, New York Civ.Prac., § 448, p. 594), it is apparent that the litigants concluded that Special Term's denial established the law of the case, for the defendants raised no issue relative to favorable termination at the trial. The parties now treat Special Term's denial as an intermediate order preserved for appeal, and in their briefs they argue the merits of that determination. Since they have thus charted their own course (see Cullen v. Naples, 31 N.Y.2d 818, 339 N.Y.S.2d 464, 291 N.E.2d 587; Stevenson v. News Syndicate Co., 302 N.Y. 81, 96 N.E.2d 187), we see no reason to deter them from their current effort to seek resolution of the question.

We begin our analysis of the favorable termination issue by noting that in the absence of a factual dispute relative to the circumstances of the dismissal, favorable termination is a question for the court (Restatement, Torts 2d, § 673), although it becomes one for the jury if there is a factual controversy (see McNair v. Maijgren, 181 App.Div. 272, 168 N.Y.S. 257). Since no such controversy exists here, our resolution of the question necessarily depends on our view of the law under the circumstances described.

The requirement of favorable termination has been a critical element to proof of the tort of malicious prosecution since a very early date (see Payn v. Porter, Croke's Rep. (4th ed., James 1) 490, Cro.Jac. 490 (1619); Anonymous, Y.B., 2 Rich. III pl. 9 (1484)) and has been described as "a kind of pre-condition to the later action, the sine qua non " (Munoz v. City...