Mantia v. Hanson

• Decision Date: 13 November 2003
• Parties: Jack L. MANTIA, Plaintiff, v. Darrel HANSON, dba Darrel's Economy Mufflers, Defendant. Darrel Hanson, dba Darrel's Economy Mufflers, Appellant, v. Bailey, Pinney & Associates, LLC, Respondent.
• Court: Oregon Court of Appeals

79 P.3d 404

190 Or. App. 412

Jack L. MANTIA, Plaintiff, v. Darrel HANSON, dba Darrel's Economy Mufflers, Defendant.

Darrel Hanson, dba Darrel's Economy Mufflers, Appellant, v. Bailey, Pinney & Associates, LLC, Respondent.

99-12-13064; A112282.

Court of Appeals of Oregon.

Argued and Submitted July 17, 2003.

Decided November 13, 2003.

Sonia A. Montalbano argued the cause for appellant. With her on the briefs was Cobb, Bosse & Montalbano, LLP.

Jacqueline L. Koch, Portland, argued the cause for respondent. With her on the brief were Koch & Deering, A.E. Bud Bailey, Tualatin, J. Dana Pinney, and Bailey, Pinney & Associates.

Before HASELTON, Presiding Judge, and DEITS, Chief Judge, and LINDER, Judge.

HASELTON, P.J.

Third-party plaintiff Darrel Hanson (Hanson) appeals from a judgment that (1) dismissed his claim for intentional interference with economic relations against third-party defendant Bailey, Pinney & Associates, LLC (the Bailey firm); (2) awarded the Bailey firm attorney fees under ORS 20.105 "and/or" ORCP 17 C and D; and (3) awarded enhanced prevailing party fees under ORS 20.190(3). Hanson contends, principally, that the court erred in concluding that his tortious interference claim was precluded by a defense of absolute privilege and that, in all events, the court erred in awarding attorney fees and imposing an enhanced prevailing party fee because there was, at least, an objectively reasonable basis in law for the assertion of the tortious interference claim.

We conclude that, as a matter of law, in this procedural posture, the Bailey firm's alleged conduct could not constitute actionable "improper means" for purposes of a tortious interference claim. We thus affirm the dismissal of that claim. Nevertheless, given the evolution of our case law, we cannot say that there was "no objectively reasonable basis" in law for the assertion of the tortious interference claim. Accordingly, we reverse the award of attorney fees and vacate and remand for reconsideration of the imposition of an enhanced prevailing party fee.¹

For purposes of our review, the material facts are undisputed. In December 1999, plaintiff Mantia, represented by the Bailey firm, brought a number of statutory and common-law claims against his former employer Hanson² Soon thereafter, Hanson's attorney, Montgomery Cobb, sent a letter to the Bailey firm, alleging that Mantia was untruthful and that some of the alleged claims were baseless. Cobb demanded that Mantia voluntarily dismiss a number of the claims. Cobb also threatened that Mantia and the Bailey firm would be liable "[i]n the event any further legal action is required to respond to any filings or other actions taken by your firm."

Despite Cobb's letter, in June 2000 the Bailey firm, on behalf of Mantia, filed an amended complaint alleging essentially the same claims. Ten days later, Hanson filed an answer, counterclaims against Mantia, and the third-party claim against the Bailey firm. One of Hanson's counterclaims against Mantia was a claim for tortious interference with an economic relationship. That claim alleged that, after Hanson had demoted Mantia, Mantia, in retaliation, made baseless and defamatory complaints to various agencies with the intent to "interfere with [Hanson's] business by requiring [Hanson] to devote substantial time and money defending against the false claims of [Mantia], by ruining [Hanson's] business, or by putting [Hanson] out of business."

The focus of our review is the related third-party claim by Hanson against the Bailey firm. That claim alleged, in part, that Cobb had sent letters to the Bailey firm "alerting them to the frivolous nature of Mantia's claims," and that,

"[s]ubsequent to receiving these letters, the Bailey firm continued to pursue the frivolous claims of plaintiff Mantia against defendant Hanson. The Bailey firm has done so in concert with Mantia with the intent to interfere with defendant Hanson's business by requiring Hanson to devote substantial time and money defending against the false claims of the plaintiff, by ruining defendant Hanson's business, or by putting Hanson out of business."

The Bailey firm moved, pursuant to ORCP 21 A(8), to dismiss, alleging, in part, that the tortious interference claim was barred by the defense of absolute privilege because that claim was based on the Bailey firm's conduct undertaken in the representation of its client, Mantia. The Bailey firm concurrently sought attorney fees as a sanction and an enhanced prevailing party fee under ORS 20.190(3). Hanson responded that the absolute privilege was inapplicable in that it pertains only to statements, and not to conduct, in initiating and prosecuting litigation. Hanson also resisted the motion for sanctions, arguing that the assertion of the tortious interference claim was not objectively unreasonable.

The trial court granted the motion to dismiss, based on the applicability of the absolute privilege:

"I'm just disturbed by this having been brought in the first place. It didn't have to have been brought. I don't think it's legally appropriate. I don't find any basis for it. It's bad practice. It's disturbing.

"* * * * *

"[The filing of the amended complaint is] absolutely privileged, and I don't see any basis upon which to have brought the third party complaint in the first instance. And I see no way to do anything other than to dismiss the third party complaint."

The trial court further determined that the Bailey firm was entitled to attorney fees under ORS 20.105 and ORCP 17 C(3),³ awarding fees of $5,388.50, and also imposed an enhanced prevailing party fee of $1,250 pursuant to ORS 20.190(3). Thereafter, the court entered a judgment pursuant to ORCP 67 B embodying that disposition.

On appeal, Hanson and the Bailey firm raise a battery of contentions and countercontentions. Ultimately, however, our analysis and disposition proceed from the resolution of two issues: First, was Hanson's tortious interference claim barred by absolute privilege? Second, even if so, was Hanson's position to the contrary objectively unreasonable, given the state of the law? Our answers to those two questions obviate the need to address the parties' various alternative, derivative, or subsidiary arguments.

We begin with absolute privilege and, particularly, with the applicability of such a privilege to a tortious interference claim against a lawyer based on the lawyer's conduct undertaken in the course of representing a client. Hanson asserts that absolute privilege should not apply to such a claim—and that, instead, the defendant attorney should be able to raise only a defense of qualified, good-faith privilege.

At its base, this case implicates a fundamental tension between the law of "absolute privilege," as applied to attorneys, and the recognition that there are exceptions—most obviously the availability of "wrongful initiation" actions against attorneys—to the general principle that attorneys cannot be civilly liable for actions undertaken in representing a client. If the protective policies underlying the absolute privilege are, in fact, so "absolute" and compelling, then why permit a "wrongful initiation" action against an attorney? And how does the allowance of such an action, in turn, affect the cognizability of a tortious interference claim against an attorney based on the same operative facts?

Oregon courts have long recognized, and enforced, an absolute privilege for statements in the course of or incident to judicial and quasi-judicial proceedings. That privilege applies equally to parties to such proceedings and to their attorneys. See, e.g., Ramstead v. Morgan, 219 Or. 383, 388-89, 347 P.2d 594 (1959) (citing cases); Chard v. Galton, 277 Or. 109, 559 P.2d 1280 (1977); Troutman v. Erlandson, 286 Or. 3, 593 P.2d 793 (1979); Wallulis v. Dymowski, 323 Or. 337, 918 P.2d 755 (1996).

Section 586 of the Restatement (Second) of Torts (1977) describes the controlling principles:

"An attorney at law is absolutely privileged to publish defamatory matter concerning another in communications preliminary to a proposed judicial proceeding, or in the institution of, or during the course and as a part of, a judicial proceeding in which he participates as counsel, if it has some relation to the proceeding."

See Lee v. Nash, 65 Or.App. 538, 542, 671 P.2d 703 (1983), rev. den., 296 Or. 253, 675 P.2d 491 (1984) (citing Restatement at section 586 with approval). Comment a to section 586 explains the policies underlying the privilege:

"The privilege stated in this Section is based upon a public policy of securing to attorneys as officers of the court the utmost freedom in their efforts to secure justice for their clients. Therefore the privilege is absolute. It protects the attorney from liability in an action for defamation irrespective of his purpose in publishing the defamatory matter, his belief in its truth, or even his knowledge of its falsity. These matters are of importance only in determining the amenability of the attorney to the disciplinary power of the court of which he is an officer. The publication of defamatory matter by an attorney is protected not only when made in the institution of the proceedings or in the conduct of litigation before a judicial tribunal, but in conferences and other communications preliminary to the proceeding."⁴

See also Ramstead, 219 Or. at 387, 347 P.2d 594 ("`There are certain relations of life in which it is so important that the persons engaged in them should be able to speak freely that the law takes the risk of their abusing the occasion and speaking maliciously as well as untruly, and in order that their duties may be carried on freely and without fear of any action being brought against them[.]'" (Quoting Moore v. Weaver, 2 KB 520, 521 (1928))); cf. Franson v. Radich, 84 Or.App. 715, 719, 735 P.2d 632 (1987) (absolute privilege extends to "actions taken and statements made in connection with a judicial...