Siliski v. Allstate Ins. Co., 01-127.

• Decision Date: 15 August 2002
• Docket Number: No. 01-127.,01-127.
• Court: Vermont Supreme Court
• Parties: Joseph J. and Doreen H. SILISKI v. ALLSTATE INSURANCE COMPANY, James J. Guiel, Peggy Dumont and Michael Gannon.

811 A.2d 148

Joseph J. and Doreen H. SILISKI v. ALLSTATE INSURANCE COMPANY, James J. Guiel, Peggy Dumont and Michael Gannon.

No. 01-127.

Supreme Court of Vermont.

August 15, 2002.

Motion for Reargument Denied September 5, 2002.

Ritchie E. Berger, Craig S. Nolan and Afi Ahmadi of Dinse, Knapp & McAndrew, P.C., Burlington, for Plaintiffs-Appellants.

Bret P. Powell of Powell, Orr & Bredice, P.C., Burlington, for Defendant-Appellee Allstate Insurance Co.

Marc B. Heath and David E. Bond of Downs Rachlin & Martin, PLLC, Burlington, for Defendant-Appellee Guiel.

Thomas F. Heilmann of Heilmann, Ekman & Associates, Inc., Burlington, for Defendant-Appellee Gannon.

Present: DOOLEY, MORSE, JOHNSON and SKOGLUND, JJ., and GIBSON, J. (Ret.), Specially Assigned.

MORSE, J.

Plaintiffs Joseph and Doreen Siliski, individually and as guardians and next best friend of Chase Siliski, appeal from the superior court's summary judgment in favor of defendants Allstate Insurance Company, James Guiel, Michael Gannon and Peggy Dumont. The Siliskis brought suit against defendants for malicious prosecution and intentional infliction of emotional distress. They did so based on a counterclaim asserted by Dumont in a personal injury action by the Siliskis against her following an automobile accident involving Dumont and the Siliskis' son Chase, which Dumont later voluntarily dismissed. They argue on appeal that the trial court not only erroneously determined as a matter of law that the counterclaim giving rise to the Siliskis' malicious prosecution claim did not terminate in the Siliskis' favor, but also that they are entitled to judgment as a matter of law in their favor on this issue. Furthermore, they argue that the trial court erroneously determined as a matter of law that the counterclaim, which the Siliskis assert also gives rise to a claim for intentional infliction of emotional distress, was privileged and, in the alternative, failed to meet the threshold of conduct so extreme and outrageous as to establish a prima facie case. Defendants Allstate and Guiel have filed cross-appeals with regard to two discovery issues decided adversely to them in the event that we reverse the trial court's summary judgment. We affirm.¹

Although there were numerous filings before the trial court prior to its grant of summary judgment, the actual record evidence before the court was considerably more circumscribed and demonstrates that the following material facts are not in dispute: On January 2, 1995, there was an accident involving Peggy Dumont and Chase Siliski, who was eight years old at the time. Dumont was operating an automobile, and Chase was on foot. A Vermont State Police report filed shortly after the accident concluded that the accident was caused by Chase's failure to look before crossing the road. Chase suffered a broken leg and an abrasion on his head from the collision. Dumont was pregnant at the time of the accident, and, two to three days after the accident, Dumont suffered a miscarriage.

Chase's parents brought suit against Dumont individually and on Chase's behalf. Because Dumont was insured by Allstate, Allstate provided Dumont with defense counsel. The attorney hired by Allstate asserted a counterclaim on Dumont's behalf, which was subsequently amended. Among other things, each party claimed the other had caused the accident. More specifically, Dumont's amended claim alleged that as a result of the accident, as well as the Siliskis' allegations against her—contrary to Chase's statements at the time of the accident—she had suffered damages.

The parties proceeded to engage in discovery. Sometime after Allstate's attorney filed the counterclaim, Allstate's casualty claim manager, Frank Corso, learned of its filing. He instructed the staff claim analyst handling the case, James Guiel, to tell the attorney to withdraw his representation with respect to the counterclaim because Allstate had retained him only to provide a defense and he was concerned about potential conflicts arising from the dual representation. Guiel did so.

The attorney was unable to find replacement counsel to take over Dumont's claim. After discussing the status of the counterclaim with Dumont, the attorney filed a motion to dismiss the counterclaim without prejudice. In it, he cited the potential conflict arising from his dual representation and requested that the dismissal be without prejudice so that Dumont could file the claim at a later date should she find replacement counsel. The Siliskis filed a motion in opposition, requesting that the dismissal be with prejudice. They argued that Dumont had waived her privilege not to assert the counterclaim under V.R.C.P. 13(a)(3) (amended 1999) (excepting from compulsory counterclaims claims arising in actions covered by liability insurance which would require separate counsel), and thus Dumont's ability to reassert the claim would be barred by res judicata. They also argued that her claim would be barred by collateral estoppel, citing this Court's decision in Berisha v. Hardy, 144 Vt. 136, 474 A.2d 90 (1984). The court granted Dumont's motion to dismiss her counterclaim without prejudice, finding that neither res judicata nor collateral estoppel applied with respect to the dismissal, as no issue had proceeded to trial at that point, nor was there a final judgment. The court further noted that the decision to dismiss with prejudice was otherwise discretionary and declined to make the dismissal with prejudice.

The Siliskis' claim against Dumont proceeded to trial, and the jury returned a special verdict finding Dumont 60% negligent and Chase 40% negligent, and determining both individuals' negligence proximately caused the accident. Subsequent to the jury verdict, the Siliskis filed the present suit against Allstate, Allstate's claim analyst, Dumont's counsel and Dumont for malicious prosecution and intentional infliction of emotional distress (IIED) based on Dumont's counterclaim in the previous suit. The trial court granted summary judgment to the defendants, determining that, with regard to the claim of malicious prosecution, the dismissal of Dumont's counterclaim without prejudice did not terminate the claim in the Siliskis' favor; that the claim was privileged such that it could not give rise to a claim of IIED; and that filing the claim did not rise to the level of extreme and outrageous conduct as a matter of law. The Siliskis now appeal.

In order to recover for malicious prosecution, a plaintiff must demonstrate that a party instituted a proceeding against the individual without probable cause, that the party did so with malice, that the proceeding terminated in that individual's favor, and that the individual suffered damages as a result of the proceeding. Chittenden Trust Co. v. Marshall, 146 Vt. 543, 549, 507 A.2d 965, 969 (1986). As we have noted previously, the termination of the prior proceeding in the malicious prosecution claimant's favor is an "essential element" of the tort. Id. at 549, 507 A.2d at 970. The trial court in this case determined, as a matter of law, that the dismissal without prejudice in the prior proceeding giving rise to this case, examined in light of the circumstances surrounding that dismissal, was not a termination in the Siliskis' favor.

At least some courts have held that a voluntary dismissal simply cannot constitute a favorable termination for purposes of a malicious prosecution claim. See, e.g., KT Bolt Mfg. Co. v. Texas Elec. Coops., 837 S.W.2d 273, 275 (Tex.App.1992) (voluntary nonsuit does not constitute a favorable termination); Withall v. Capitol Fed. Sav. of Am., 164 Ill.App.3d 851, 115 Ill. Dec. 803, 518 N.E.2d 328, 331 (1987) (under Illinois law voluntary dismissal alone is insufficient to satisfy requirement of favorable termination). But see Cult Awareness Network v. Church of Scientology Int'l, 177 Ill.2d 267, 226 Ill.Dec. 604, 685 N.E.2d 1347, 1352 (1997) (categorical rule misinterpreted prior case law; a voluntary dismissal under certain circumstances may be sufficient to meet requirement). Other courts have adopted the Restatement approach which looks to the circumstances surrounding the dismissal. See, e.g., Frey v. Stoneman, 150 Ariz. 106, 722 P.2d 274, 278 (1986); Wong v. Panis, 7 Haw.App. 414, 772 P.2d 695, 699 (1989); Nelson v. Miller, 227 Kan. 271, 607 P.2d 438, 446 (1980); see also Restatement (Second) of Torts § 674, cmt. j (1977) (whether a withdrawal or abandonment constitutes a favorable termination "depends upon the circumstances under which the proceedings are withdrawn"). We think this the better practice in such cases.

Under this approach, if the manner of termination, including dismissal, reflects negatively on the merits of the case, it will be considered favorable to the defendant. Frey, 722 P.2d at 279; Wong, 772 P.2d at 699. More specifically, if the dismissal somehow indicates that the defendant is innocent of wrongdoing, it will be considered a favorable termination. Frey, 722 P.2d at 278; Union Oil of Cal. v. Watson, 468 So.2d 349, 353-54 (Fla.Dist. Ct.App.1985). On the other hand, if the reason for dismissal is "not inconsistent" with a defendant's wrongdoing, it will not be considered a favorable termination. Union Oil, 468 So.2d at 353, 355; see also Cult Awareness Network, 226 Ill.Dec. 604,685 N.E.2d at 1353 ("a favorable termination is limited to only those legal dispositions that can give rise to an inference of lack of probable cause"). If the circumstances surrounding dismissal are ambiguous on this point, the determination should be left for trial. Frey, 722 P.2d at 279; see also Chittenden Trust Co.,146 Vt. at 549,507 A.2d at 970 (where there is a factual dispute with regard to the circumstances under which the prior proceedings were terminated, question should be left to jury).

There is no dispute regarding the material facts surrounding the voluntary dismissal at issue in this case, and the nature of the...