Frey v. Stoneman

• Decision Date: 02 July 1986
• Docket Number: No. 18367-PR,18367-PR
• Citation: 722 P.2d 274,150 Ariz. 106
• Parties: James L. FREY, M.D.; Grant A. Hertel, M.D.; Bernard E. Levine, M.D.; David R. Long, M.D.; John F. Murphy, M.D.; Philip J. Rubin, M.D.; George L. Sibley, M.D.; S. Sridhar, M.D.; Peter R.S. Thomas, M.D.; and Gregory B. Wingate, M.D., Plaintiffs-Appellants, v. Martin L. STONEMAN and Jane Doe Stoneman, his wife, Defendants-Appellees.
• Court: Arizona Supreme Court

Page 274

722 P.2d 274

150 Ariz. 106

James L. FREY, M.D.; Grant A. Hertel, M.D.; Bernard E. Levine, M.D.; David R. Long, M.D.; John F. Murphy, M.D.; Philip J. Rubin, M.D.; George L. Sibley, M.D.; S. Sridhar, M.D.; Peter R.S. Thomas, M.D.; and Gregory B. Wingate, M.D., Plaintiffs-Appellants, v. Martin L. STONEMAN and Jane Doe Stoneman, his wife, Defendants-Appellees.

No. 18367-PR.

Supreme Court of Arizona, In Banc.

July 2, 1986.

Teilborg, Sanders & Parks by Frank A. Parks, Richard A. Kent, Phoenix, for plaintiffs-appellants.

Monbleau, Vermeire & Turley by Albert R. Vermeire, Christopher J. Bork, Phoenix, for defendants-appellees.

FELDMAN, Justice.

The issue in this case is whether a dismissal constitutes a "favorable termination" of a medical malpractice proceeding for purposes of a subsequent malicious prosecution action brought against the attorney who had filed the previous malpractice claim. The trial judge found that the malpractice action had been dismissed without consideration of its merits. He held, therefore, that the prior proceeding had not been favorably terminated and dismissed the malicious prosecution case. The court of appeals affirmed, Frey v. Stoneman, 150 Ariz. 163, 722 P.2d 331 (App.1985). Because this is a matter of first impression we accepted review pursuant to Rule 23, Ariz.R.Civ.App.P., 17A A.R.S. We have jurisdiction under Ariz. Const. art. 6, § 5(3) and A.R.S. § 12-120.24.

FACTS

In September 1981, attorney Martin L. Stoneman filed a medical malpractice action, alleging that Good Samaritan Hospital, thirteen individual physicians and the Arizona Health Plan negligently caused the death of his client's husband. ¹ On January 22, 1982, after limited discovery, attorney Frank Parks filed a motion for summary judgment on behalf of the Health Plan and eleven of the defendant physicians (the "doctors"). ² The hospital and two other physicians (the "Good Samaritan defendants") were represented by separate counsel.

Four days later, Parks' associate wrote a letter to Stoneman suggesting that the malpractice claims against the doctors be dismissed voluntarily to save both sides the time and expense of continuing litigation. Stoneman responded that he had obtained permission from his client to dismiss all claims against all defendants. Stoneman stated in his response that Parks had indicated during a telephone conversation that the doctors would not agree to dismissal. Stoneman asked for clarification. On February 25, Parks answered as follows:

Dear Mr. Stoneman:

... As you are aware, the Defendants in this case have always taken the position that they did nothing wrong I have no objection to your stipulation for dismissal with prejudice as to Good Samaritan Hospital. As I told you during our lengthy telephone conversation a short time ago, I wish to have the motion for summary judgment ruled upon by Judge Stover. My clients are interested in having a resolution on the merits and for that reason, since these motions have already been prepared and filed, I see no reason why they cannot be heard by Judge Stover. If it is the wish of your client and yourself to have the matter quickly resolved as to my clients, it would seem that a simple phone call to Judge Stover would result in her granting my motion for summary judgment. I confirmed to you by phone that the Mutual Insurance Company of Arizona had incurred the costs in this case and under the circumstances of [your client's] financial condition, MICA had agreed not to pursue their collection of costs....

My clients are very much in favor of an immediate dismissal and this can be accomplished probably within five minutes by your calling Judge Stover to advise her that you do not oppose our motion for summary judgment.

On March 15, Stoneman filed a motion to dismiss the complaint and a motion to continue all other proceedings pending a hearing on his motion to dismiss. The doctors did not respond or object and did not appear at the hearing on Stoneman's motion. On March 19, Judge Pickrell approved a stipulated dismissal between Stoneman's client and the Good Samaritan defendants and granted Stoneman's motion to dismiss as to "all other defendants not covered in the stipulation." These "other defendants" were the doctors represented by Parks. Parks thereafter prepared a formal order of dismissal stating that the action was "dismissed with prejudice as to all parties, each party to bear his own costs." Judge Pickrell signed that order on March 23, 1982.

Parks also had written to Judge Pickrell on March 22, stating that the motion for summary judgment was still pending, that Stoneman had no objection to the court granting it and that the court should enter the form of judgment which he enclosed and which granted the doctors judgment and awarded them their costs. Parks did not send a copy of this letter to Stoneman. On April 2, Judge Pickrell signed Parks' form of judgment. As a result, there were two conflicting judgments: one (on stipulation as to some defendants and non-appearance as to others) dismissing the complaint as to all defendants and awarding no costs, the other granting summary judgment in favor of the doctors and awarding them costs.

Finally, on October 22, the doctors revealed the underlying purpose of these maneuvers and filed this action for malicious prosecution against Stoneman. Stoneman moved pursuant to Rule 12(b)(6), Ariz.R.Civ.P., 16 A.R.S., ³ to dismiss the malicious prosecution action, arguing that favorable termination was a necessary element for the subsequent malicious prosecution action and that voluntary dismissal with prejudice was not a favorable termination.

Finding that there was "no explicit consideration of the merits" in the medical malpractice action, the trial court held that voluntary dismissal was not a termination in the doctors' favor. Stoneman's motion to dismiss the malicious prosecution case was therefore granted. Plaintiffs appealed and the court of appeals affirmed on the same grounds. 150 Ariz. at 165, 722 P.2d at 333. We accepted review.

DISCUSSION

1. Procedure

Initially, we must dispose of a procedural matter alluded to by the plaintiff doctors. As noted, the trial court granted Stoneman's motion to dismiss the malicious prosecution action under Rule 12(b)(6). In Stoneman's motion he referred the judge to the file in the underlying action. Also, the doctors attached exhibits to their response to the motion to dismiss, and Stoneman attached exhibits to his reply. In the minute entry of January 4, 1983, the trial judge stated that he had read the file in the underlying action as well as all the pleadings in the present action and found that "there appear[ed] to [have been] no explicit consideration of the merits" of the underlying action. He therefore dismissed the present case with prejudice. Because evidence extrinsic to the pleadings was offered to and relied on by the trial judge in making this decision, the motion to dismiss should have been treated as one for summary judgment. ⁴ Goodman v. Superior Court, 137 Ariz. 348, 350, 670 P.2d 746, 748 (App.1983); State of Ohio v. Peterson, Lowry, Rall, Barber & Ross, 585 F.2d 454, 456 (10th Cir.1978); see Annot. 2 A.L.R.Fed. 1027 (1969).

Since the motion to dismiss should have been treated as a motion for summary judgment, the proper inquiry is whether there were genuine issues of material fact; only if there were none might Stoneman have been entitled to judgment as a matter of law. Rule 56(c). Thus we are faced with two issues. First, as a purely legal matter, can a voluntary dismissal with prejudice constitute a favorable termination for purposes of a malicious prosecution action? If so, are there genuine issues of material fact in this case which precluded the granting of summary judgment on this issue?

2. Nature of the Action

This case was pleaded, tried and appealed under the rubric of "malicious prosecution," a term originally used in the law of torts to describe a damage action brought against one who had maliciously caused the institution of criminal proceedings without probable cause. See W. PROSSER & W. KEETON, LAW OF TORTS § 119 at 870 (5th ed. 1984). This action, which began as a remedy for unjustifiable criminal proceedings, was extended to include wrongful initiation of civil suits. Id., § 120 at 889. While not recognized in all jurisdictions, or in relation to all types of wrongfully instituted civil proceedings, Id., § 120 at 891, it has been recognized in Arizona. See Ackerman v. Kaufman, 41 Ariz. 110, 15 P.2d 966 (1931). We are not asked to define the limits of the cause of action in the case at bench, and do not do so. We restrict our consideration to the "favorable termination" element.

3. Favorable Termination

A plaintiff presenting a claim for malicious prosecution must establish the following elements: that a prior prosecution terminated in favor of the plaintiff, that the defendant was the prosecutor, that it was actuated by malice, that there was no probable cause and that damages were sustained. Overson v. Lynch, 83 Ariz. 158, 161, 317 P.2d 948, 949 (1957); Nataros v. Superior Court, 113 Ariz. 498, 500, 557 P.2d 1055, 1057 (1976); Restatement (Second) of Torts § 674 (1965). ⁵ A termination does not satisfy the first element if it is the result of compromise or settlement of the claim. Jaffe v. Stone, 18 Cal.2d 146, 152, 114 P.2d 335, 339 (1941).

Whether a voluntary dismissal ⁶ is a favorable termination is a matter of first impression in Arizona, although other forms of termination have been considered in this context. For instance, if an appeal is pending, a malicious prosecution action is premature. Moran v. Klatzke, 140 Ariz 489, 490, 682 P.2d 1156, 1157 (App.1984) (relying on, inter alia, Restatement § 674). A malicious prosecution action is also premature if it is asserted in a counterclaim to the original action. Nataros v. Superior Court, 113 Ariz. at 500, 557 P.2d at 1056. On the other...