Kauffman v. Shefman

• Decision Date: 11 August 1988
• Docket Number: No. 91078,91078
• Citation: 426 N.W.2d 819,169 Mich.App. 829
• Parties: C. William KAUFFMAN and Carol A. Kauffman, Plaintiffs-Appellants, v. Stephen E. SHEFMAN, Defendant-Appellee, and Michigan National Bank-Ann Arbor and Dennis Larson, jointly and severally, Defendants. 169 Mich.App. 829, 426 N.W.2d 819
• Court: Court of Appeal of Michigan — District of US

Page 819

426 N.W.2d 819

C. William KAUFFMAN and Carol A. Kauffman Plaintiffs-Appellants, v. Stephen E. SHEFMAN, Defendant-Appellee and Michigan National Bank-Ann Arbor and Dennis Larson, jointly and severally, Defendants.

No. 91078.

169 Mich.App. 829, 426 N.W.2d 819

Court of Appeals of Michigan.

Submitted Feb. 11, 1988.

Decided July 18, 1988.

Released for Publication Aug. 11, 1988.

[169 MICHAPP 831] Philip Green and Christine A. Green, Ann Arbor, for plaintiffs-appellants.

Miller, Canfield, Paddock & Stone by David A. French and Allyn D. Kantor, Ann Arbor, for Stephen E. Shefman.

Before J.H. GILLIS, P.J., and WEAVER and BATZER, ^* JJ.

BATZER, Judge.

Plaintiffs, C. William Kauffman and Carol A. Kauffman, appeal as of right from an April 4, 1986, circuit court order dismissing with prejudice their complaint alleging common law malicious prosecution pursuant to MCR 2.116(C)(8). The circuit court dismissed the complaint as against defendant Stephen E. Shefman because it failed to allege the element of special injury. We affirm.

On December 17, 1979, the Kauffmans purchased real property under a land contract from Gregory and Elizabeth Reynolds. On September 30, 1981, the Reynoldses assigned their interests in the property to defendant Michigan National Bank--Ann Arbor as security for a note. On October 5, 1982, defendant Shefman, the bank's attorney, [169 MICHAPP 832] filed suit on behalf of the bank in Washtenaw Circuit Court against the Reynoldses and the Kauffmans jointly and severally, alleging that the Reynoldses had defaulted on the note. The suit requested the circuit court to determine the Kauffmans' interest in the subject property in the context of the alleged default. The suit was dismissed with prejudice by stipulation of counsel on November 30, 1982, after the Reynoldses cured the default.

On June 23, 1983, Shefman filed a second suit against the Reynoldses and the Kauffmans on behalf of the bank, alleging a second default by the Reynoldses on the note. A notice of lis pendens was filed on the subject property in connection with the second suit. Although there are no allegations in the malicious prosecution complaint regarding the termination of the second suit, there is some indication in the record that it was dismissed, apparently for lack of progress and without prejudice. ¹

On June 26, 1985, the Kauffmans filed the instant complaint, alleging malicious prosecution against Shefman, the bank and its vice-president, Dennis Larson. In their complaint, the Kauffmans alleged the following injuries:

"17. That at the time the second lawsuit was filed, a notice of lis pendens against the plaintiffs' property was also filed, and on knowledge and belief recorded with the Register of Deeds.

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"26. That as a direct and proximate result of the [169 MICHAPP 833] malicious civil prosecution by these defendants, plaintiffs suffered special and consequential damages including but not limited to interference with their persons and property rights, costs and attorney fees, damage to their credit rating and reputation in the community, physical injury, mental anguish, embarrassment, and humiliation."

The circuit court granted Shefman's motion for summary disposition pursuant to MCR 2.116(C)(8), on the ground that the Kauffmans' complaint failed to allege a special injury. This appeal followed. The Kauffmans assert that the filing of notice of lis pendens in the second suit constitutes the element of special injury required to sustain a claim for malicious prosecution. Moreover, the Kauffmans assert that the institution of successive suits in itself constitutes a special injury. ²

A motion for summary disposition under MCR 2.116(C)(8) will be granted only where the claim is unenforceable as a matter of law. Because such a motion tests the legal basis of the complaint, its factual allegations are taken as true, along with any reasonable inferences or conclusions which may be drawn from them. Rathbun v. Starr Commonwealth for Boys, 145 Mich.App. 303, 307, 377 N.W.2d 872 (1985), lv. den. 424 Mich. 908 (1986); Local 80 Sheet Metal Workers v. Tishman Construction Corp., 103 Mich.App. 784, 787, 303 N.W.2d 893 (1981).

To survive a motion for summary disposition [169 MICHAPP 834] under MCR 2.116(C)(8), the Kauffmans' complaint must allege facts to support all of the elements of a malicious prosecution action. Those elements are:

"1. Prior proceedings terminated in favor of the present plaintiff;

"2. Absence of probable cause for those proceedings;

"3. Malice, defined as a purpose other than that of securing the proper adjudication of the claim; and

"4. A special injury that flows directly from the prior proceedings."

Young v. Motor City Apartments Ltd., 133 Mich.App. 671, 675, 350 N.W.2d 790 (1984).

We agree with the circuit court's ruling that plaintiffs' complaint is defective in its failure to allege the element of special injury. Neither the filing of the notice of lis pendens on the subject property nor the institution of these two lawsuits against the Kauffmans caused the type of special injury required to sustain a claim for malicious prosecution in Michigan.

In Friedman v. Dozorc, 412 Mich. 1, 33-34, 312 N.W.2d 585 (1981), our Supreme Court declared that Michigan follows the so-called "English rule" with respect to the special injury requirement in a malicious prosecution action. This restrictive rule allows a malicious prosecution action only where one of three types of injury has been sustained, namely, injury to fame, injury to person or liberty, or injury to property. Although the Court in Friedman declined to define precisely the boundaries of the special injury concept, it stated its intent to use this requirement as a means of limiting the availability of a malicious prosecution action.

[169 MICHAPP 835] "We are persuaded that the special injury requirement should be retained to limit the circumstances in which an action for the malicious prosecution of civil proceedings can be maintained.

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"The cure for an excess of litigation is not more litigation. Meritorious as well as frivolous claims are likely to be deterred. There are sure to be those who would use the courts and such an expanded tort remedy as a retaliatory or punitive device without regard to the likelihood of recovery or who would seek a means of recovering the actual costs of defending the first action without regard to whether it was truly vexatious." 412 Mich. at 42, 46, 312 N.W.2d 585.

In deciding Friedman, our Supreme Court was guided by its opinion in Brand v. Hinchman, 68 Mich. 590, 36 N.W. 664 (1888). This latter malicious prosecution action arose from an attachment obtained by the defendant against the plaintiffs' property. When officers entered the plaintiffs' store to execute the writ of attachment, plaintiffs told them that the debt underlying the attachment had been settled and requested the officers to wait until the defendant could be contacted before executing the writ. The officers remained for a least half an hour at the store until defendant's employee arrived to inform the officers that the claim had been settled. The officers left plaintiffs' store without serving the writ or levying on plaintiffs' property. The officer charged with executing the writ testified that he would have prevented the plaintiffs from selling anything in the store until the arrival of defendant's employee. The Brand Court held that an action for malicious prosecution would lie because plaintiffs' property had been subjected to "a technical taking and possession." 68 Mich. at 596, 36 N.W. 664.

In interpreting Brand, the Friedman Court was [169 MICHAPP 836] careful to point out that the technical or constructive nature of the seizure of plaintiffs' property did not eliminate the essential element of seizure from a claim for malicious prosecution. 412 Mich. at 37, 312 N.W.2d 585. The Court observed that plaintiffs alleging malicious prosecution in Michigan have been required to show "some special injury equivalent to a seizure of property as a result of the defendant's institution of civil proceedings." 412 Mich. at 39-41, 312 N.W.2d 585.

The instant case involving a lis pendens is different from the Brand case. While the Brand plaintiffs were prevented from selling property in their store by the physical presence of the officers, the filing of notice of lis pendens did not interfere with the Kauffmans' possession of the subject property. Their complaint does not allege that they attempted to convey the property during the relevant time period; but even had they done so, the lis pendens would not have prevented the conveyance. While a notice of lis pendens may, as a practical matter, inhibit the alienation of the property in that it warns prospective purchasers that they take subject to the judgment rendered in litigation concerning the property, Backowski v. Solecki, 112 Mich.App. 401, 412, 316 N.W.2d 434 (1982), the lis pendens does not prohibit alienation. As the learned trial judge pointed out in his well-crafted opinion, the "damage" caused plaintiffs by the filing of the lis pendens is exactly the kind of damage which would ordinarily result from a foreclosure action. Moreover, the filing of a lis pendens in this case was not damage caused by the bank's suit against plaintiffs. Had the bank not joined plaintiffs as defendants in the foreclosure suits, a notice of lis pendens would have been filed against the property anyway since those suits sought to determine the rights of other parties to the property.

[169 MICHAPP 837] Notice of lis pendens serves an important public purpose by protecting the right to litigation involving real property and protecting prospective purchasers by apprising them of disputes regarding rights in the land. These policies should not be thwarted by allowing the filing of a notice of lis pendens by an ultimately unsuccessful litigant to constitute grounds for a malicious prose...