Mintz v. Accident & Injury Med. Specialists, PC

• Decision Date: 24 February 2011
• Docket Number: No. 08CA1867.,08CA1867.
• Citation: 284 P.3d 62
• Parties: David J. MINTZ, Plaintiff–Appellant and Cross–Appellee, v. ACCIDENT AND INJURY MEDICAL SPECIALISTS, PC; Nadler, Inc.; Elite Chiropractic Care, Inc.; Physical Therapy, Inc.; Myocare, Inc.; A Shi Acupuncture, Inc.; Comprehensive Diagnostic Services, Inc.; Mile High Medical Group, LLC; and Global Physician Services, P.C., Defendants–Appellees and Cross–Appellants.
• Court: Colorado Court of Appeals

284 P.3d 62

David J. MINTZ, Plaintiff–Appellant and Cross–Appellee,

v.ACCIDENT AND INJURY MEDICAL SPECIALISTS, PC; Nadler, Inc.; Elite Chiropractic Care, Inc.; Physical Therapy, Inc.; Myocare, Inc.; A Shi Acupuncture, Inc.; Comprehensive Diagnostic Services, Inc.; Mile High Medical Group, LLC; and Global Physician Services, P.C., Defendants–Appellees and Cross–Appellants.

No. 08CA1867.

Colorado Court of Appeals, Div. IV.

Nov. 10, 2010.

As Modified on Denial of Rehearing Feb. 24, 2011.

Springer and Steinberg, P.C., Jeffrey A. Springer, Michael P. Zwiebel, Denver, Colorado, for Plaintiff–Appellant and Cross–Appellee.

Hill & Robbins, P.C., Ronald L. Wilcox, Nathan P. Flynn, Denver, Colorado, for Defendants–Appellees and Cross–Appellants.

Opinion by Judge HAWTHORNE.

In this bifurcated interpleader action, plaintiff, David J. Mintz, appeals the judgment entered for defendants, Accident and Injury Medical Specialists, PC, Nadler, Inc., Elite Chiropractic Care, Inc., Physical Therapy, Inc., Myocare, Inc., A Shi Acupuncture, Inc., Comprehensive Diagnostic Services, Inc., Mile High Medical Group, LLC, and Global Physician Services, P.C. (the providers), on their abuse of process and breach of fiduciary duty counterclaims. He also appeals the damages awarded to the providers on their abuse of process counterclaim. The providers cross-appeal the trial court's order denying their C.R.C.P. 59 post-judgment motion for additional attorney fees and prejudgment interest. The providers also request an attorney fees award in this appeal.

We reverse the judgment, including the damages award, and remand with instructions that the trial court enter judgment in Mintz's favor on the providers' counterclaims. We therefore do not address the providers' requests for attorney fees and prejudgment interest.

I. Facts

Mintz is an attorney who represented thirty-seven clients in automobile accident cases. The providers treated these clients and were to be paid from the clients' settlement proceeds Mintz obtained. Mintz, however, withheld $130,186.79 from the providers, which he kept in his Colorado Lawyer Trust Account Foundation (COLTAF) account.

According to the providers, Mintz withheld the payments because of an unrelated dispute between them. Mintz and the providers jointly paid for advertising through an entity owned by Mintz's wife called “The Lawyer Connection,” which referred injured persons to Mintz for legal services and referred them to the providers for medical services. The providers allege that Mintz had been demanding an extra fee of twenty percent of what the providers received for treating clients Mintz referred to them who did not come to him through The Lawyer Connection. The providers paid Mintz $41,000, but Mintz asserted that they owed him far more.

Mintz subsequently filed an interpleader complaint naming, as pertinent here, the thirty-seven client-patients and the nine providers as defendants. Mintz asserted in his complaint that he was concerned about potential multiple liability and conflicting claims if he were to distribute the money in his COLTAF account to either the providers or the clients. As grounds for refusing to distribute the money to the providers, the complaint alleged that the providers had overcharged the clients for treatments, failed to substantiate their bills, engaged in unnecessary and excessive treatment, and violated the Colorado Medical Practices Act and other health care practice laws.

In response to the interpleader, the providers asserted cross-claims against the clients for failing to pay their medical bills. The providers also filed counterclaims against Mintz, alleging abuse of process, breach of fiduciary duty, tortious interference with contract, and civil conspiracy.

The trial court bifurcated the case into two trials: the first trial was to determine who was entitled to the money in Mintz's COLTAF account by addressing Mintz's interpleader complaint and defendants' cross-claims, and the second trial was to resolve the providers' counterclaims against Mintz. After the first trial, the court ruled for the providers, making numerous well-supported findings. The court concluded that they were entitled to the $130,186.79 in Mintz's COLTAF account.

The court then held the second trial and found that Mintz abused the interpleader process and breached his fiduciary duties to the providers. However, the court found that the providers did not prove their tortious interference with contract or civil conspiracy counterclaims. As compensatory damages, the court awarded the providers their reasonable attorney fees and costs, totaling $284,050.09, plus $2,000 in punitive damages.

Mintz appeals, and the providers cross-appeal.

II. Mintz's Contentions

A. Abuse of Process

Mintz contends that the trial court erred in ruling that he abused the interpleader process. Because we conclude the record does not support the court's finding on the second element of the abuse of process tort, the improper use element, we agree.

1. Standard of Review

We review the trial court's factual findings under the clear error standard, deferring to the findings unless they are so clearly erroneous as to lack record support. Levine v. Katz, 192 P.3d 1008, 1012 (Colo.App.2006). However, we review its legal conclusions de novo. Id.

2. Legal Principles

The abuse of process tort arose to provide a remedy where the malicious prosecution tort did not. See W.P. Keeton et al., Prosser & Keeton on Torts § 121, at 987 (5th ed. 1984) (“The action for malicious prosecution, whether it be permitted for criminal or civil proceedings, has failed to provide a remedy for a group of cases in which legal procedure has been set in motion in proper form, with probable cause and even with ultimate success, but nevertheless has been perverted to accomplish an ulterior purpose for which it was not designed.”).

The malicious prosecution tort addresses the situation where a person knowingly initiates baseless litigation. See Hewitt v. Rice, 119 P.3d 541, 544 (Colo.App.2004), aff'd,154 P.3d 408 (Colo.2007); Keeton, § 121, at 871. In contrast, the abuse of process tort provides a remedy in situations where litigation is properly initiated, but is misused through an irregular, generally coercive act. See Walker v. Van Laningham, 148 P.3d 391, 394 (Colo.App.2006) (seeking to accomplish coercive goal is misuse of process); Am. Guar. & Liability Ins. Co. v. King, 97 P.3d 161, 170 (Colo.App.2003) (same) ( King ); Keeton, § 121, at 897 (“Abuse of process differs from malicious prosecution in that the gist of the tort is not commencing an action or causing process to issue without justification, but misusing, or misapplying process justified in itself for an end other than that which it was designed to accomplish.”); see also Joseph B. Maher, Comment, Survival of the Common Law Abuse of Process Tort in the Face of a Noerr–Pennington Defense, 65 U. Chi. L.Rev. 627, 640 (1998); Timothy P. Getzoff, Comment, Dazed and Confused in Colorado: The Relationship Among Malicious Prosecution, Abuse of Process, and the Noerr–Pennington Doctrine, 67 U. Colo. L.Rev. 675, 676, 700 (1996).

Accordingly, to prevail on an abuse of process claim, a plaintiff must prove the defendant (1) had an ulterior purpose in using a judicial proceeding; (2) used the proceeding in an improper manner by taking a willful action that was improper in the proceeding's regular course; and (3) caused damage. See Walker, 148 P.3d at 394;Aztec Sound Corp. v. Western States Leasing Co., 32 Colo.App. 248, 252, 510 P.2d 897, 899 (1973); Keeton, § 121, at 871.

As to the first element, an ulterior purpose is one that the legal proceeding was not designed to accomplish. SeeRestatement (Second) of Torts § 682 cmt. b; King, 97 P.3d at 170–71. Usually, the ulterior purpose is to obtain an advantage in another matter to achieve the surrender of property or the payment of money. Hertz v. Luzenac Group, 576 F.3d 1103, 1118 (10th Cir.2009). However, there is no liability for abuse of process if the defendant's ulterior purpose was simply incidental to the proceeding's proper purpose. Restatement (Second) of Torts § 682 cmt. b (“[T]here is no action for abuse of process when the process is used for the purpose for which it is intended, but there is an incidental motive of spite or an ulterior purpose of benefit to the defendant.”).

As to the second element, the “improper use” element, using a legal proceeding in an improper manner requires proof of a willful act by the defendant in using the process that is not proper in the proceeding's regular course. King, 97 P.3d at 170 (quoting Keeton, § 121, at 898). “If the action is confined to its regular and legitimate function in relation to the cause of action stated in the complaint there is no abuse, even if the plaintiff had an ulterior motive in bringing the action....” Inst. for Professional Development v. Regis College, 536 F.Supp. 632, 635 (D.Colo.1982) (quoting 1 Am.Jur.2d Abuse of Process § 13 (1962)). Thus, the filing of a justified lawsuit cannot constitute the act necessary to sustain an abuse of process claim, even if the suit was filed for an ulterior purpose. See id.; 1 Am.Jur.2d Abuse of Process § 11; cf.1 Am.Jur.2d Abuse of Process § 12 (no abuse of process for using discovery procedures justified in proceeding's regular course, even if used for an ulterior purpose; however, use of unjustified discovery for ulterior purpose is an abuse of process).

Moreover, although the improper act need not occur after process has been initiated, there must nevertheless be some improper act to conclude that one used the legal proceeding in an improper manner. See Keeton, § 121, at 898 (rejecting suggestion that improper act must occur after process is initiated); see also Simon v. Navon, 71 F.3d 9, 15 (1st Cir.1995) (wrongful use of process does not have to occur after filing).

Finally, although the ulterior purpose may be inferred from the...