Penwag Property Co., Inc. v. Landau

• Decision Date: 16 March 1977
• Citation: 372 A.2d 1162,148 N.J.Super. 493
• Parties: The PENWAG PROPERTY CO., INC., a corporation of the State of New York and the Penwag Property Co., Inc., a corporation of the State of New Jersey, Plaintiffs-Appellants and Cross-Respondents, v. David LANDAU, Defendant-Respondent and Cross-Appellant.
• Court: New Jersey Superior Court — Appellate Division

Page 493

148 N.J.Super. 493

372 A.2d 1162

The PENWAG PROPERTY CO., INC., a corporation of the State of

New York and the Penwag Property Co., Inc., a corporation of the State of New Jersey, Plaintiffs-Appellants and Cross-Respondents, v. David LANDAU, Defendant-Respondent and Cross-Appellant.

Superior Court of New Jersey,

Appellate Division.

Argued Feb. 14, 1977.

Decided March 16, 1977.

Ronald Berman, Trenton, for plaintiffs-appellants and cross-respondents (Warren, Goldberg & Berman, Trenton, attorneys).

Robert Alan Vort, Newark, for defendant-respondent and cross-appellant (Weston, Kravitz & Rank, Trenton, attorneys).

Before Judges CARTON, KOLE and LARNER.

The opinion of the court was delivered by

LARNER, J.A.D.

Plaintiff landlord brought this action in the Chancery Division of the Superior Court seeking a judicial declaration that defendant tenant breached a commercial lease by refusing to subordinate to a mortgage and praying for possession and damages. Defendant generally denied the allegations of the complaint and counterclaimed for a declaration that his lease is valid and subsisting; that he is not required to subordinate to the mortgage as sought by plaintiff, and for damages, costs and counsel fees for 'malicious use of process' in prosecuting the litigation against him.

After protracted pretrial proceedings and a lengthy trial, the judge rendered a full and exhaustive opinion in which he entered judgment in favor of defendant on the main issues in the litigation, declaring that defendant did not breach the lease, that it was valid and subsisting, and that the mortgage to which plaintiff sought defendant's subordination was in fact subordinate to the lease. In addition, the judge entered judgment in favor of defendant on the third counterclaim, designated by the judge as 'malicious abuse of process.' A subsequent trial on damages with respect to that counterclaim resulted in a finding of compensatory damages consisting of counsel fees and costs of defense of the main action in the sum of.$19,000 and punitive damages in the amount of $20,000.

Plaintiff appeals from the whole of the judgments entered on the complaint and counterclaim. Defendant cross-appeals from the quantum of damages awarded on his counterclaim.

We find from our review of the record that the judgment entered on the issues of the litigation relating to the lease and the rights of the parties thereunder, and the explicit and detailed findings of the court, are overwhelmingly supported by substantial credible evidence and the applicable law. And in view of the fact that a major factor in the trial judge's determination was his evaluation of the credibility of the actors in the controversy, his conclusion is unassailable on appeal. Rova Farms Resort v. Investors Ins. Co., 65 N.J. 474, 484, 323 A.2d 495 (1974); State v. Johnson, 42 N.J. 146, 162, 199 A.2d 809 (1964); Sandler v. Lawn-A-Mat Chem. & Equip. Corp., 141 N.J.Super. 437, 446--447, 358 A.2d 805 (App.Div.), certif. den. 71 N.J. 503, 366 A.2d 658 (1976).

From our vantage point the major issue for appellate determination is the propriety of the damage award on defendant's counterclaim couched in terms of malicious use of process and converted in the trial judge's opinion to an action for malicious Abuse of process.

The judge based his affirmative judgment for defendant on the counterclaim on the same factual findings as those leading to the dismissal of plaintiff's complaint. In essence, these findings concluded that plaintiff and its officers contrived to dispose of the lease and tenant by creating a sham mortgage and improperly demanding that the lessee subordinate to that mortgage as part of a preconceived plan to wipe out a burdensome lease through ultimate foreclosure or threat of foreclosure of the mortgage. From these findings the judge proceeded to the conclusion that this fraudulent or improper conduct culminated in perverted use of the lawsuit herein with an ulterior and improper motive, creating a valid basis for a claim of malicious abuse of process.

Our analysis of the record and the judge's factual findings lead to the conclusion that there is no basis for denominating the cause of action as one for malicious abuse of process. The complaint sought a declaratory judgment that defendant breached the lease and a judgment for possession and damages. Regardless of the lack of merit of plaintiff's position, it was entitled to invoke the judicial process to vindicate the same, including a demand for possession of the premises. And even when the litigation is inspired by malicious or other improper motives, that in itself is not sufficient to sustain a complaint for malicious abuse of process. See Earl v. Winne, 34 N.J.Super. 605, 614, 112 A.2d 791 (Cty.Ct.1955). Such a cause of action arises from the employment of legal process in a manner not contemplated by law. 'Regular and legitimate use of process, though with a bad intention, is not malicious abuse of process.' ADM Corp. v. Speedmaster Packaging Corp., 384 F.Supp. 1325, 1349 (D.N.J.1974), mod. on other grounds 525 F.2d 662 (3 Cir. 1975).

In discussing the difference between malicious Use of process and malicious Abuse of process, the Court of Errors and Appeals noted in the leading case of Ash v. Cohn, 119 N.J.L. 54, 194 A. 174 (E. & A. 1937):

An action for malicious abuse of process is distinguished from an action for malicious use of process in that the action for abuse of process lies for the improper, unwarranted and perverted use of process after it has been issued while that for the malicious use of it lies for causing process to issue maliciously and without reasonable or probable cause. Grainger v. Hill, 4 Bing.N.C. 212. Thus it is said, in substance, that the distinction between malicious use and malicious abuse of process is that the malicious use is the employment of process for its ostensible purpose, although without reasonable or probable cause, whereas the malicious abuse is the employment of a process in a manner not contemplated by law. (at 58, 194 A. at 176.)

A more recent exposition of the elements of an action for malicious abuse of process is found in Gambocz v. Apel, 102 N.J.Super. 123, 130, 245 A.2d 507 (App.Div.), certif. den. 52 N.J. 485, 246 A.2d 447 (1968), wherein we emphasized that basic to such a cause of action is the requirement that the litigator perform further acts after the issuance of process which represent the perversion or abuse of the legitimate purposes of that process. See also, Mayflower Industries v. Thor Corp., 15 N.J.Super. 139, 151, 83 A.2d 246 (Ch.Div.1951), aff'd 9 N.J. 605, 89 A.2d 242 (1952). In the absence of some coercive or illegitimate use of the judicial process there can be no claim for its abuse. Coercive action or bad motives or intent prior or leading to the institution of the lawsuit do not suffice to expose a plaintiff to a cause of action for malicious abuse of process.

It is manifest that the process herein was proper and regular and was used to secure a determination of a dispute between landlord and tenant--a legitimate use of the judicial process, albeit with unjust and ulterior motives. Nevertheless, since it was not utilized to accomplish an end outside the legitimate purview of the litigation itself, the gist of the cause of action is lacking. See, E.g., 1 Am.Jur. Abuse of Process, § 4 at 253; Prosser, Torts (4 ed. 1971), § 121 at 857.

Since we do not sanction the solution of legal controversies by resort to form or labels, we shall proceed to consider the propriety of the counterclaim award within the framework of the cause of action of malicious prosecution, otherwise designated in civil cases as malicious Use of process.

An action for malicious prosecution of a civil suit is governed in general by the same rules as those arising out of a criminal prosecution, with some significant differences. Prosser, op. cit., § 120 at 853. For a successful recovery in connection with civil litigation, the plaintiff must establish that (1) the suit was brought without probable cause, (2) it was actuated by malice, (3) it has been terminated favorably to plaintiff, and (4) plaintiff suffered a special grievance. Mayflower Industries v. Thor Corp., supra, 15 N.J.Super. at 151--152, 83 A.2d 246.

Factually, the counterclaim and the trial judge's findings relating to the same fit into some of the basic elements of an action for malicious use of process in that there was clearly established the absence of probable cause for the institution of the suit as well as malice. However, the coexistence of these two elements alone does not suffice to permit recovery of damages which flow solely from the defense of the action which was maliciously prosecuted.

We need not determine the question whether the assertion of a cause of action for malicious use of process by way of counterclaim in the same action which is allegedly prosecuted with malice can be sustained in view of the requirement of successful termination of the original proceeding. See Mayflower Industries v. Thor Corp., supra, 15 N.J.Super. at 148--149, 83 A.2d 246. Whatever ruling might be made as to compliance with this element, it is nevertheless apparent that defendant's cause of action must fail because of the absence of a special grievance. This essential element of proof of special grievance connotes damage different from and beyond the expenses and counsel fees entailed in the defense of the civil suit. As early as 1816 the Supreme Court in Potts v. Imlay, 4 N.J.L. 382, 386 (Sup.Ct.1816), laid down the rule that (T)his action cannot be maintained for prosecuting a civil suit in a court of common law having competent jurisdiction by the party himself in interest, unless the defendant has, upon such prosecution been arrested without cause and deprived of his liberty, or made to suffer other special grievance different from, and superadded to the ordinary expense of a defence.

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