Fielder Agency v. Eldan Const. Corp.

• Decision Date: 17 June 1977
• Citation: 152 N.J.Super. 344,377 A.2d 1220
• Parties: FIELDER AGENCY, a New Jersey Corporation, Plaintiff, v. ELDAN CONSTRUCTION CORPORATION, a New Jersey Corporation, Defendant.
• Court: New Jersey Superior Court

Page 344

152 N.J.Super. 344

377 A.2d 1220

FIELDER AGENCY, a New Jersey Corporation, Plaintiff, v. ELDAN CONSTRUCTION CORPORATION, a New Jersey Corporation, Defendant.

Superior Court of New Jersey, Law Division.

June 17, 1977.

Michael V. Camerino, Somerville, for plaintiff (Ozzard, Rizzolo, Klein, Mauro & Savo, Somerville, attorneys).

Abraham I. Mayer, Newark, for defendant (Mayer & Mayer, Newark, attorneys).

GAYNOR, J. C. C., Temporarily Assigned.

This matter is now before the court on plaintiff's motion for summary judgment dismissing defendant's counterclaim for compensatory and punitive damages resulting from plaintiff's alleged malicious abuse of process.

The action giving rise to this counterclaim was instituted by plaintiff, a licensed real estate broker, to recover real estate commissions allegedly due from defendant under exclusive listing agreements, together with damages because of the alleged wrongful breach by defendant of a sales contract, thereby causing plaintiff the loss of a commission. Defendant's counterclaim for malicious abuse of process was severed and the trial of plaintiff's complaint before a jury resulted in a no cause.

Although considerable evidence relating to the business association of the parties was presented during the course of the trial of plaintiff's cause of action, the principal issues of fact involved the circumstances under which several exclusive listing agreements were executed by defendant and the reasons for the termination of the sales contract. It was plaintiff's contention, and proofs were offered to support it, that the listing agreements were entered into by defendant after they had been fully prepared by plaintiff and for the purpose of assuring plaintiff of at least the listing broker's share of the total commission in the event that it was not the selling broker. Defendant contended that the agreements were executed by it in blank in reliance upon plaintiff's assurance that the forms would be completed so as to provide that other brokers, as selected by defendant, could negotiate sales of the subject properties and, if sales were consummated as a result of such negotiations, that full commissions would be payable to these brokers and plaintiff would not be entitled to a listing broker's share of the commissions. By returning a verdict of no cause the jury indicated its conclusion that plaintiff had failed to sustain its allegations by the required standard of proof.

A similar result was reached with respect to plaintiff's claim for damages because of the alleged wrongful termination of the sales contract by defendant. This claim involved the factual issue of the prospective purchaser's financial ability or inability to consummate the contract. The evidence presented by plaintiff in support of its contention did not include the testimony of the contract purchasers which, of course, would have been the best evidence of whether they were able to complete the proposed purchase. Although the jury was not instructed that an adverse inference might be drawn from the failure to produce these persons as witnesses, the absence of such testimony, together with the explanations offered on behalf of defendant, presumably caused the jury to conclude that plaintiff had not met its burden of proving this claim by a preponderance of the evidence.

In its counterclaim defendant alleges that plaintiff's institution of its suit was fraudulent and actuated by malice, and that defendant suffered damages as a result thereof. It appears from the pleadings, affidavits and brief filed on behalf of defendant that the damages allegedly sustained were the legal fees and costs incurred in defending against plaintiff's claims and also the injury to defendant's reputation and business resulting from plaintiff's alleged slanderous remarks concerning defendant's evasion of its just debts by refusing to pay commissions due to the plaintiff.

It is unclear from defendant's counterclaim whether the cause of action being asserted is that recognized as malicious use of process or that denominated malicious abuse of process. A distinction exists between these two causes of action. In substance, "malicious use" is the employment of process for its ostensible purpose although without reasonable or probable cause, whereas "malicious abuse" is the employment of a process in a manner not contemplated by law. Ash v. Cohn, 119 N.J.L. 54, 194 A. 174 (E. & A. 1937).

A comprehensive review of the elements of the tort of malicious abuse of process is set forth in Gambocz v. Apel, 102 N.J.Super. 123, 245 A.2d 507 (App.Div.), certif. den. 52 N.J. 485, 246 A.2d 447 (1968). As therein stated, the gist of this tort is the misuse of process justified in itself for a purpose other than that which it was designed to accomplish, and the essential elements are an ulterior motive and some further act after the issuance of process representing the perversion of the legitimate use of the process. Bad motives or malicious intent leading to the institution of a civil action are insufficient to support a cause of action for malicious abuse of process. A showing of some coercive or illegitimate use of the judicial process is necessary to a claim that there has been an abuse of the process. Penwag Property Co. v. Landau, 148 N.J.Super. 493, 372 A.2d 1162 (App.Div. 1977); Mayflower Industries v. Thor Corp., 15 N.J.Super. 139, 83 A.2d 246 (Ch.Div. 1951), aff'd 9 N.J 605, 89 A.2d 242 (1952); 1 Am.Jur. Abuse of Process, § 4; Prosser, Law of Torts (4 ed. 1971), § 121. It is undisputed that the process caused to be issued by plaintiff in the present case was regular and was being utilized to obtain a determination of the commission controversy existing between a real estate broker and the seller of real property. As such, it constituted a proper use of the judicial process. Even if the claims therein asserted by plaintiff were actuated by unjust motives, no facts have been presented which would support a conclusion or an inference that the suit was instituted to accomplish an end outside the scope of the litigation itself. The required elements of this purported cause of action are therefore lacking.

Viewing defendant's counterclaim as one for malicious use of process, or as sometimes referred to, malicious prosecution, we observe that a successful recovery under such a cause of action requires defendant to establish that (1) the suit was brought against it without probable cause, (2) plaintiff was actuated by malice, (3) the action has been terminated favorably to defendant and (4) defendant counterclaimant suffered a special grievance. Mayflower Industries v. Thor Corp., supra. As indicated, plaintiff's action was terminated in defendant's favor. For the purposes of this motion we will assume that plaintiff's suit was brought without probable cause and was actuated by malice. It is therefore unnecessary to consider the arguments advanced by counsel relating to these issues. The remaining element requiring consideration is whether the damages asserted by defendant constitute the special injury necessary to sustain the cause of action asserted by the counterclaim.

The rule in this State is that the special injury or grievance required to support a suit for malicious prosecution of a civil action is some interference with a party's personal liberty or freedom or damage different from and in addition to the ordinary litigation expenses incurred in defense of the primary action. ¹ Potts v. Imlay, 4 N.J.L. 377 (Sup.Ct. 1816); Bitz v. Meyer, 40 N.J.L. 252 (Sup.Ct. 1878); Schneider v. Mueller, 132 N.J.L. 163, 39 A.2d 132 (E. & A. 1944); Mayflower Industries v. Thor Corp., supra; Penwag Property Co. v. Landau, supra. The so-called English rule found early acceptance in New Jersey and has been re-affirmed recently in Penwag Property Co. v. Landau, supra, wherein the court observed:

This essential element of proof of special grievance connotes damage different from and beyond the expenses and counsel fees entailed in the defense of the civil suit. As early as 1816, the Supreme Court in Potts v. Imlay, 4 N.J.L. 377, 386 (Sup.Ct. 1816), laid down the rule that:

(T)his action cannot be maintained for prosecuting a civil suit in a court of common law having competent jurisdiction by the party himself in interest, unless the...