O'Toole v. Franklin

• Decision Date: 13 September 1977
• Parties: Richard D. O'TOOLE, M. D., and Roger H. Hutchings, M. D., Appellants, v. Wesley A. FRANKLIN, Burton H. Bennett, Jack Ofelt, Jr., Bernard Jolles and Vincent G. Ierulli, Franklin, Bennett, Ofelt & Jolles, P. C., and Charles Mathis, Respondents.
• Court: Oregon Supreme Court

Page 561

569 P.2d 561

279 Or. 513

Richard D. O'TOOLE, M. D., and Roger H. Hutchings, M. D., Appellants, v. Wesley A. FRANKLIN, Burton H. Bennett, Jack Ofelt, Jr. Bernard Jolles and Vincent G. Ierulli, Franklin Bennett, Ofelt & Jolles, P. C., and Charles Mathis, Respondents.

Supreme Court of Oregon, In Banc.

Argued and Submitted May 6, 1977.

Decided Sept. 13, 1977.

William V. Deatherage of Frohnmayer & Deatherage, Medford, argued the cause for appellants. With him on the briefs was James L. Sutherland.

William L. Hallmark, Portland, argued the cause for respondents. With him on the brief were Jones, Lang, Klein, Wolf & Smith, Frank Josselson, Lynda D. Nelson, Portland, and John P. Cooney of Denman & Cooney, Medford.

LINDE, Justice.

I

In a number of recent decisions, this court has followed the "English rule," first adopted in this state in 1896, that an action for the malicious prosecution of civil proceedings requires a showing of "special injury" beyond the trouble, cost, and other consequences normally associated with defending oneself against unfounded legal charges. Mitchell v. Silver Lake Lodge, 29 Or. 294, 45 P. 798 (1896) (wrongful attachment); Buck v. Gale, 271 Or. 90, 530 P.2d 1248 (1975), and cases there cited. ¹ The present appeal asks us to reconsider this rule.

The appeal is from an order sustaining a demurrer to plaintiffs' complaint for failure to state a cause of action. The complaint alleged, in summary, that appellants are practicing physicians and partners in the Medford Clinic; that in July 1974, the respondent attorneys commenced a medical malpractice action against them on behalf of the respondent Mathis, alleging that the physicians had administered certain drugs to Mr. Mathis in 1972; that upon learning of this action the physicians informed Mr. Mathis and his attorneys that they had not treated Mathis during the period in question and repeatedly asked that the action be dismissed, but that it was not dismissed until January 1975; and that the action was prosecuted maliciously and without probable cause despite respondents' knowledge that the physicians had not administered any drugs to Mathis. The first count of the complaint continued with an allegation that prosecution of the malpractice action injured appellants' professional reputation "to their special injury in the sum of $50,000," and that they were entitled to exemplary and punitive damages in the sum of $200,000. A second count added allegations of negligence on the part of Mathis is not informing his attorneys that appellants did not treat him during the period in question, and on the part of the attorneys in not properly investigating the case and advising Mathis that he had no just claim against them, but rather inciting him to commence the malpractice action. It also added a demand for $50,000 general damages for "emotional disturbance and anguish." Upon respondents' demurrer, the trial court held that these allegations did not state a cause of action against either Mathis or his attorneys, and appellants declined to plead further.

II

On appeal, the doctors argue first that the asserted damage to their professional reputations from the unfounded charge of malpractice should be recognized as the kind of extraordinary harm contemplated by the "special injury" required for the tort of wrongful (or "malicious") prosecution of a civil action. ² It may be conceded that "special" is not the most self-explanatory of terms. This court has found the requirement satisfied when the chosen proceeding itself involved immediate interference with the person, property, income, or credit of the subsequent complainant, apart from the ultimate judgment, as in the use of garnishment, Alvarez v. Retail Credit Ass'n, 234 Or. 255, 381 P.2d 499 (1963), attachment, Crouter v. United Adjusters, Inc., 259 Or. 348, 485 P.2d 1208 (1971), or involuntary bankruptcy, Balsiger v. American Steel, 254 Or. 204, 212, 451 P.2d 868, 458 P.2d 932, 40 A.L.R.3d 289 (1969). That is consistent with decisions of other courts which follow the English rule. See 52 Am.Jur.2d "Malicious Prosecution" § 11. This view focuses on the defendant's responsibility for his choice, as plaintiff in the earlier action, to trigger the interfering procedure; in the later action the "special injury is determined by the manner of the defendant's prosecution of the original case rather than by any happenstance of the plaintiff's situation." Buck v. Gale, supra, 271 Or. at 94, 530 P.2d at 1250. "Special injury" in this procedural sense excludes the kind of secondary consequences that are a common and often unavoidable burden on defendants in "all similar causes," id. at 92, 530 P.2d 1248, quoting Balsiger v. American Steel, supra, 254 Or. at 206, 451 P.2d 868, 458 P.2d 932. But beyond immediate legal interference, the court has also recognized exceptionally sensitive proceedings as actionable if maliciously instituted, e. g., insanity proceedings, Hill v. Carlstrom, 216 Or. 300, 338 P.2d 645 (1959), and it has left open the possibility that "special injury" might be claimed when a defendant is on notice that the claimant whom he wrongfully subjected to legal proceedings was uniquely vulnerable to being harmed thereby, beyond the ordinary hardships of similar cases. Donovan v. Barnes, supra, 274 Or. at 712-713, 548 P.2d 980.

The present plaintiffs have pleaded neither of these elements; their claim of "special injury" to professional reputation is one that would be common to most professional malpractice actions. They offer a two-step argument for nevertheless recognizing this injury as a basis of liability for malicious civil proceedings: One, that recovery for injury to reputation from bad-faith litigation is the necessary counterpart of the litigant's privilege against liability for defamation; and two, that a remedy for an injury to reputation in some form is required by the constitution. If such an injury is not recognized as "special," they argue, then the requirement of a "special injury" should be abandoned altogether.

The Restatement of Torts, as appellants point out, recognizes that a plaintiff's privilege to accuse a defendant finds its limits in the defamed party's potential recovery for "wrongful initiation of the proceedings," Restatement, Torts, § 587, Comment a. Recovery for injury to reputation in such an action is not inconsistent with Oregon cases, if the elements of the action are otherwise made out; the difference is that the Restatement does not adopt "special injury" as one of the elements. Restatement, Torts, §§ 674, 681(b); cf. Balsiger v. American Steel, supra; Donovan v. Barnes, supra. Appellants' main argument is that this court should also drop that element from the tort of malicious prosecution of civil proceedings. The case is fairly and candidly presented as a suggestion for a judicial change in the established rule on policy grounds.

The "English rule" requiring some direct interference or other extraordinary injury is followed, at last count, by seventeen American jurisdictions, including Oregon. ³ Twenty-three states impose no such condition on the tort; ⁴ the remainder have not decided the issue. The rule has been criticized by Dean Prosser and, as we have said, rejected by the Restatement of Torts. The argument is that the mere award of costs to the successful defendant, without the attorney fees included in England, is not full compensation for an unfounded lawsuit, which is true; and that while honest litigants should be encouraged to seek justice, "surely there is no policy in favor of vexatious suits known to be groundless, which are a real and often a serious injury". Prosser, The Law of Torts 851, § 120 (4th ed., 1971). Adequate protection for bona fide litigants, according to this view, exists in "the heavy burden of proof upon the plaintiff, to establish both lack of probable cause and an improper purpose," ibid.

While the first proposition may be conceded, the second has seemed doubtful to other eminent authority. The question is not whether a plaintiff should sue only in good faith, but under what circumstances he must be prepared to defend his good faith in a countersuit. As Judge Edgerton put it in reaffirming the English rule for the District of Columbia, "(s)ome sort of balance has to be struck between the social interests in preventing unconscionable suits and in permitting honest assertion of supposed rights. These interests conflict because a suit which its author thinks honest may look unconscionable to a jury." Soffos v. Eaton, 80 U.S.App.D.C. 306, 152 F.2d 682, 683 (1945). The "special interest" rule is not squarely addressed to misgivings whether that balance is adequately protected by the burden of proof and by the inferences allowed a jury in malicious prosecution cases, and we might not in the first instance adopt the rule for that reason. But this case is not the first instance, and the rule as we have stated it does make some contribution insofar as it holds a plaintiff to notice of circumstances or procedures that subject a defendant to immediate interference or extraordinary risk of harm.

Nor do we accept the argument that the litigant's privilege against a libel action constitutionally compels a malicious prosecution action specifically for injury to reputation. Article I, section 10, Oregon Constitution, provides:

No court shall be secret, but justice shall be administered, openly and without purchase, completely and without delay, and every man shall have remedy by due course of law for injury done him in his person, property, or reputation.

This guarantee, common in state constitutions since 1776 and as old as chapter 40 of Magna Carta, ⁵ promises a remedy for injury to reputation as much as, but no more than, for injury to other personal and property interests that may be equally burdened by vexatious litigation; that is to say, it promises a remedy "by due course of law." But the rules...