Cooperstein v. Van Natter, 6885-7-I

• Decision Date: 05 May 1980
• Docket Number: No. 6885-7-I,6885-7-I
• Citation: 611 P.2d 1332,26 Wn.App. 91
• Parties: Craig A. COOPERSTEIN, and Linda B. Cooperstein, his wife; and Thomas P. Dickinson and Beverly H. Dickinson, his wife, Respondents, v. William J. VAN NATTER, Appellant. LAKE WASHINGTON BUILDERS, William Harnecker, Owner, Plaintiff, v. Craig A. COOPERSTEIN, and Linda B. Cooperstein, his wife; and Thomas P. Dickinson and Beverly H. Dickinson, his wife, Respondents, and William J. Van Natter and Jane Doe Van Natter, his wife, Appellants.
• Court: Washington Court of Appeals

Page 91

26 Wn.App. 91

611 P.2d 1332

Craig A. COOPERSTEIN, and Linda B. Cooperstein, his wife; and Thomas P. Dickinson and Beverly H. Dickinson, his wife, Respondents, v. William J. VAN NATTER, Appellant.

LAKE WASHINGTON BUILDERS, William Harnecker, Owner, Plaintiff, v. Craig A. COOPERSTEIN, and Linda B. Cooperstein, his wife; and Thomas P. Dickinson and Beverly H. Dickinson,

his wife, Respondents,

and

William J. Van Natter and Jane Doe Van Natter, his wife, Appellants.

No. 6885-7-I.

Court of Appeals of Washington, Division 1.

May 5, 1980.

Reconsideration Denied July 9, 11, 1980.

Camden M. Hall, counsel on appeal only, Foster, Pepper & Riviera, Seattle, William J. Van Natter, Bothell, for appellants.

William M. Robinson, Seattle, for respondents.

SWANSON, Judge.

William J. Van Natter and wife appeal from portions of a judgment entered on a jury verdict awarding Craig A. Cooperstein and Thomas P. Dickinson and their wives $15,800 in damages for breach of contract. Cooperstein and Dickinson cross-appeal from that part of the judgment setting aside an $8,000 verdict for defamation against Van Natter. At the heart of the dispute is a contention that defendant Van Natter, vendor of an apartment house building under a real estate contract, wrongfully refused to endorse over to plaintiffs Cooperstein and Dickinson (Cooperstein), assignees of the vendee, a check representing proceeds covering fire damage to the building.

The facts pertinent to the issues raised are as follows: On September 4, 1976, fire broke out in the apartment building causing damage to five units, several bathrooms and the ground floor cafe. Cooperstein was required by the terms of the real estate contract to provide fire insurance, and a $20,000 policy was in force. The real estate contract further provided:

In case of damage or destruction from a peril insured against, the proceeds of such insurance remaining after payment of the reasonable expense of procuring the same shall be devoted to the restoration or rebuilding of such improvements within a reasonable time, unless purchaser elects that said proceeds shall be paid to the seller for application on the purchase price herein.

(Emphasis added.)

Cooperstein elected to repair the building and so informed Van Natter. Van Natter responded that he wanted the proceeds applied to the balance owing on the contract. Cooperstein meanwhile received bids for the repair work and on October 12, 1976, signed a contract with William Harnecker to repair the fire damage and otherwise bring the building into compliance with housing code provisions. The agreed price was $18,000, a third payable in advance. The repair contract was expressly contingent upon Van Natter's making the insurance proceeds available.

Van Natter objected to payment in advance. He refused to release the funds, and Harnecker was unable to begin work. Following demand by Cooperstein's counsel, Van Natter agreed by letter to release the funds after completion of the repairs. However, no provision was made for the necessary advance payment, so Cooperstein borrowed $8,000, of which $5,000 was paid to Harnecker. Upon completion of the repairs counsel for Cooperstein forwarded to Van Natter documentation that the work had been done and requested that the check be endorsed to Cooperstein. Van Natter, however, refused to endorse the draft. Cooperstein sold the building to pay the $8,000 note and other debts. He filed suit against Van Natter on March 8, 1977. Harnecker subsequently brought suit against Cooperstein, et al., and Van Natter to foreclose his lien for the repair work, and the two actions were later consolidated for trial. On May 5, 1977, Van Natter filed an answer to the lien foreclosure action in which he counterclaimed against Harnecker and cross-claimed against Cooperstein for abuse of process. Van Natter alleged

That the Defendants Cooperstein and Dickinson and the Plaintiff Harnecker have jointly and severally engaged in a number of instances of use of legal process for an ulterior purpose, to force the Defendant Van Natter to relinquish control of the above-described insurance company draft in order to further a kick-back scheme between the Plaintiff Harnecker and the Defendants Cooperstein and Dickinson, wherein the Plaintiff Harnecker allegedly was to perform the repairs to the Leary Apartments for $18,000.00, but in fact, has agreed to perform them for $15,000.00 to rebate to the Defendants Cooperstein and Dickinson the sum of $3,000.00, . . .

(Emphasis added.)

Cooperstein cross-claimed for defamation based on Van Natter's kickback allegation. On a motion for summary judgment the lien foreclosure action against Van Natter was dismissed. Cooperstein then accepted Van Natter's offer to deposit the proceeds with the court; Harnecker was paid, and the lien foreclosure action against Cooperstein, et al., was dismissed.

The remaining cross-claims and the original action for breach of contract went to trial on December 6, 1977. The jury returned verdicts against Van Natter of $15,800 on the contract claim and $8,000 on the defamation claim. The court, however, granted Van Natter's motion for judgment n. o. v. on the defamation claim. Van Natter appeals from the judgment in the breach of contract action, and Cooperstein, et al., cross-appeal from the judgment n. o. v. on the defamation claim.

We initially observe that these actions, begun as relatively straightforward actions for breach of contract and lien foreclosure, escalated with the filing of cross-claims, counterclaims, motions for dismissal, and a multitude of pretrial orders involving several trial judges. Consequently, a case that was estimated to take a day and a half to try resulted in an 8-day trial, and we now have for our consideration a verbatim report of proceedings totalling more than 1,000 pages, 400 pages of clerk's papers, 80 documentary exhibits, and 180 pages of appellants' briefs containing 53 assignments of error. ¹ We now undertake to unravel this procedurally complicated case.

We address the defamation issue first. The fundamental legal rules are neither complex nor in substantial dispute and may be stated as follows:

Allegedly libelous statements, spoken or written by a party or counsel in the course of a judicial proceeding, are absolutely privileged if they are pertinent or material to the redress or relief sought, whether or not the statements are legally sufficient to obtain that relief. McClure v. Stretch, 20 Wash.2d 460, 147 P.2d 935 (1944); Johnston v. Schlarb, 7 Wash.2d 528, 110 P.2d 190, 134 A.L.R. 474 (1941).

Gold Seal Chinchillas, Inc. v. State, 69 Wash.2d 828, 830, 420 P.2d 698 (1966).

Or, as put more broadly in Johnston v. Schlarb, 7 Wash.2d 528, 110 P.2d 190, 134 A.L.R. 474 (1941), the issue is not whether the allegations complained of meet a test of legal relevancy but whether "they have 'some relation' to the judicial proceedings in which they were used and have 'any bearing upon the subject matter of the litigation.' " Johnston v. Schlarb at 540, 110 P.2d at 195. ²

Thus, the determinative question is whether Van Natter's kickback allegation had some relation to or any bearing upon the relief sought. The parties disagree on what was the relief sought. Cooperstein argues the kickback allegation had no relevance to the lien foreclosure action. Van Natter contends the allegation was made in the context of a counterclaim for abuse of process and was thus relevant to the relief sought.

Was Van Natter's kickback claim relevant as a matter of law to his counterclaim for abuse of process? That is the critical issue. Van Natter's contention was that the lien foreclosure action was an abuse of process filed as part of the alleged kickback scheme between Harnecker, the builder, and Cooperstein and Dickinson. We need not decide whether the allegation of an illegal kickback scheme was legally sufficient, standing alone, to entitle Van Natter to relief for abuse of process. What is dispositive is that the kickback allegation bore an obvious relation to Van Natter's claim for abuse of process, it being the backbone of his cross-claim and counterclaim.

A further indication of the materiality or relevancy of the kickback allegation is found in Judge Goodloe's pretrial order of September 7, 1977, which directed Cooperstein to answer questions regarding the manner in which the $3,000 alleged to have been "kicked back" was applied to repairs to the apartment building.

Because the allegation of a kickback scheme was relevant to the relief sought, it was absolutely privileged, and the trial court was correct in granting Van Natter's motion for judgment n. o. v. on the defamation claim. Cooperstein argues that the trial court's reliance on Moore v. Smith, 89 Wash.2d 932, 578 P.2d 26 (1978), as authority for granting the judgment n. o. v. was misplaced. That case involved defamatory matter in a letter of complaint filed with the Tacoma-Pierce County Bar Association. The issue presented was whether the absolute privilege as is afforded statements made in judicial proceedings should be extended to protect communications to a local, voluntary bar association. The court's conclusion was that it should not because the bar association had neither the power to discipline the speaker nor to strike the statement from the record. Cooperstein argues that insofar as the issue in Moore v. Smith was whether the absolute privilege should be extended, it did not change prior case law requiring the statement in question to be relevant or pertinent to the proceeding, litigation, or relief sought. We think Cooperstein's interpretation is correct; the court in Moore was able to conclude the absolute privilege was inapplicable without reaching the issue of relevancy. But there is no claim here that the trial...