Gem Trading Co., Inc. v. Cudahy Corp.

• Decision Date: 06 December 1979
• Docket Number: No. 46121,46121
• Citation: 92 Wn.2d 956,603 P.2d 828
• Parties: GEM TRADING COMPANY, INC., a Washington Corporation, Plaintiff, v. CUDAHY CORPORATION, Respondent, and Robin Van Woerden, and Jane Doe Woerden, husband and wife; James Trammel and Jane Doe Trammel, husband and wife; Melvin Waller and Jane Doe Waller, husband and wife; John Doe; and Robert Roe, Petitioners.
• Court: Washington Supreme Court

Page 956

92 Wn.2d 956

603 P.2d 828

GEM TRADING COMPANY, INC., a Washington Corporation, Plaintiff, v. CUDAHY CORPORATION, Respondent and Robin Van Woerden, and Jane Doe Woerden, husband and wife James Trammel and Jane Doe Trammel, husband and wife; Melvin Waller and Jane Doe Waller, husband and wife; John Doe; and Robert Roe, Petitioners.

No. 46121.

Supreme Court of Washington, En Banc.

Dec. 6, 1979.

Perry J. Robinson, Yakima, for plaintiff.

Halverson, Applegate & McDonald, David H. Putney, Yakima, for respondent.

HOROWITZ, Justice.

This appeal raises questions of abuse of a qualified or conditional privilege to a defamation claim and the elements of the tort of malicious prosecution.

Appellant Robin Van Woerden, a cattle feed lot manager, brought a civil action for defamation and malicious prosecution of a civil case against respondent Cudahy Corporation, his former employer. The Court of Appeals, Division III, affirmed the dismissal of the claims on summary judgment by the Yakima County Superior Court because of Van Woerden's failure to show Cudahy's malice in making the conditionally privileged remarks and because of the lack of arrest of the person or seizure of property and special injury in the allegedly malicious claim initially filed by Cudahy against Van Woerden. We Affirm the trial and appellate courts' actions for the reasons set forth here.

Van Woerden was employed by Cudahy as manager of its cattle feed lot near Sunnyside, Washington. As manager, Van Woerden entered into many contracts for future delivery of hay, barley, and silage to feed cattle on the lot.

In spring 1974 an unexpected drop in the cattle market caused the price of feed to suffer a corresponding decline. Cudahy learned of the many contracts entered into by Van Woerden and, after investigating irregularities in his manner of recording contracts, terminated Van Woerden's employment and wrote to two major grain dealers with whom he had dealt disclaiming liability for "unauthorized" orders placed by Van Woerden. The allegedly defamatory letters contained the following language:

This is to advise you that we will not accept delivery of the commodities identified in the following order numbers, together with Any other unauthorized purchase orders signed by Robin Van Woerden which we may not be aware of at this time: . . . (listing purchase orders). Should you have any question about your right to decline such delivery, we remind you of your obligation to mitigate any damages you may claim in accordance with the provisions of the Uniform Commercial Code. (Italics ours).

Gem Trading Company began an action against Cudahy for breach of a contract for hay entered into by Van Woerden. In a third party complaint, Cudahy joined Van Woerden and others as third party defendants, alleging a conspiracy to defraud Cudahy by making the contract upon which Gem Trading had originally sued. In his "Answer and Cross-complaint" Van Woerden denied Cudahy's allegations and counterclaimed for damages resulting from Cudahy's disclaimer of his authority to enter into feed contracts, alleging that the repudiating letters were libelous. Van Woerden alleged that the disclaimer of authority in the letters was false, but did not allege that the misrepresentations were without justification or malicious.

Cudahy and Gem Trading settled without Van Woerden's participation, and Cudahy's third party claim against Van Woerden was consequently dismissed with prejudice. On Cudahy's motion for summary judgment, Van Woerden's counterclaim was dismissed on the ground that statements made by Cudahy in the repudiating letters were qualifiedly privileged as a matter of law. An amended counterclaim seeking damages arising from Cudahy's civil malicious prosecution of the third party complaint was also later dismissed by the trial court.

The Court of Appeals affirmed the trial court's dismissal. The court held that appellant's failure to raise the issue of Cudahy's good faith in publishing the repudiating letters made summary judgment appropriate once the allegedly defamatory statements were found to be conditionally privileged. The court further held that the civil malicious prosecution claim could not be maintained without arrest of the person or seizure of property and special injury arising from the challenged suit. In dicta, the court added that Washington's common law requirement of arrest or seizure of property was retained after passage in 1977 of a new act governing civil malicious prosecution counterclaims, RCW 4.24.350.

Two issues are presented for resolution by this court: (1) Must malice be alleged or otherwise shown to overcome a defense of qualified privilege in a defamation action so as to enable the question of abuse of privilege to go to the jury? (2) Must arrest of the person or seizure of property and special injury be alleged or otherwise shown to maintain an action for malicious prosecution of a civil case?

I

ABUSE OF QUALIFIED PRIVILEGE. Appellant Van Woerden contends the trial court erred in dismissing his action for libel without a jury determination on the issue of malice "inherent" in Cudahy's allegedly false repudiating letters. We affirm the summary judgment of dismissal for Van Woerden's failure to show that Cudahy's challenged statements constituted an abuse of privilege.

A qualified privilege protects a communication made to support the interests of the publisher. Twelker v. Shannon & Wilson, Inc., 88 Wash.2d 473, 478, 564 P.2d 1131 (1977). It was obviously in the interest of Cudahy to cancel the orders for unneeded feed. The existence of a qualified privilege on undisputed facts is a question of law; there was no jury question. Ward v. Painter's Local Union, 41 Wash.2d 859, 865, 252 P.2d 253 (1953).

After the defendant has established a qualified privilege, however, the plaintiff may defeat the protection afforded by the privilege by showing, as a matter of fact, that the privilege has been abused. Ecuyer v. New York Life Inc. Co., 101 Wash. 247, 256, 172 P. 359 (1918). In this case, the privilege would have been lost upon a showing that Cudahy's statement that the contracts made by Van Woerden were "unauthorized" was published without "fair and impartial investigation or upon reasonable grounds for such belief" in their truth. Twelker v. Shannon & Wilson, Inc., supra 88 Wash.2d at 479, 564 P.2d 1135. Van Woerden contends that, regardless of the lack of extrinsic evidence of the unreasonableness or groundlessness of Cudahy's statements, a jury must be allowed to determine the nature of the latter's intent from the allegedly defamatory letters alone. However, Van Woerden asserted only that the statements made were false.

Falsity may help raise an inference that the allegedly defamatory statements were published with inadequate investigation or grounds or with actual bad faith. In Twelker v. Shannon & Wilson, Inc., supra, this court's most recent analysis of qualified privilege, the trial court's summary judgment was reversed and the case remanded for trial because an affidavit by an independent expert showed that details the defendant had stated were not included in a report prepared by the plaintiff were indeed included in the report. But the affidavit further stated that defendant's investigation was not sufficient to have warranted the opinions expressed in the challenged statement. Twelker v. Shannon & Wilson, Inc., supra 88 Wash.2d at 478-79, 564 P.2d 1131.

Extension of Twelker to a case such as the one at bar, where mere falsity, and no other bad faith activity, on the part of Cudahy is alleged, would make determination of the existence of a qualified privilege by the court of little or no importance and force every defamation case to trial. Qualified privileges are designed to defeat the initial presumption of liability raised by publication of a false defamatory statement. If the allegedly defamed plaintiff can avoid summary judgment once a communication is found qualifiedly privileged merely by reasserting the statement's false character, the existence of the privilege is of no consequence.

The burden is on plaintiff to prove abuse of the privilege. Although at summary judgment all facts will be considered in a light most favorable to the opposing party, facts which will fulfill that burden if uncontroverted must be asserted by plaintiff. Proof of falsity alone, even if accepted by the jury, can not overcome the privilege in this case so as to require that Van Woerden's claim for defamation be submitted to the jury. To overcome a finding by the trial court that an allegedly defamatory statement is qualifiedly privileged and to thus avoid summary judgment on that ground it is necessary for the plaintiff to plead and prove by affidavit or otherwise that the statement was published without fair and impartial investigation or without reasonable grounds for belief in its truth. ¹

II

ARREST OR SEIZURE OF PROPERTY AND SPECIAL INJURY IN MALICIOUS PROSECUTION OF A CIVIL CASE. Van Woerden contends the trial court erred in dismissing his amended third-party counterclaim because the elements of malicious prosecution had not been alleged. He further asserts that the court construed too restrictively common law requirements for a civil malicious prosecution suit, or alternatively, that a statute which may have liberalized the common law, enacted after entry of summary judgment, controls and defines the elements of the cause. We affirm the dismissal for failure to fulfill Washington's common law requirements for the cause and decline to speculate on the nature of the cause of action under the newly-enacted statute, which is inapplicable to this case.

This court succinctly set out Washington's common law elements of the tort of civil malicious prosecution in Peasley v. Puget Sound Tug & Barge Co., 13 Wash.2d 485, 125 P.2d 681 (1942):

To maintain an action for malicious prosecution, the plaintiff must allege and prove (1) ...