Opinion
Adversary No. 98-6038-SD, Case No. 98-5-5062-SD
September 1999
MEMORANDUM AND ORDER GRANTING, IN PART, AND DENYING, IN PART DEFENDANTS' MOTION FOR SUMMARY JUDGMENT AND DENYING PLAINTIFFS' MOTION FOR SUMMARY JUDGMENT
The procedural posture of this adversary proceeding is contorted, and it must be explained before the substantive issues raised by the pending cross motions for summary judgment can be addressed. The Debtor, Francis Martin Insley (Insley), filed a petition in Chapter 7 in April, 1998. At that time, Insley and his attorneys, the law firm of Snider, Buck, Migdal, Myers, Chartered, and individual members thereof (Migdal, Myers) were co-defendants to a suit in the Circuit Court for Anne Arundel County, Case No. C-95-221970C (the State Case). The State Case, which is stayed as a result of Insley's bankruptcy, is the consolidation of separate suits brought by David Peltz (Peltz) and Sharpel Properties, Inc. (Sharpel), respectively.
Sharpel sued the following parties in the Circuit Court for Anne Arundel County, Case No. C-93-08370: Insley; FMI Enterprise, Inc.; James Myers; Steven Migdal; Snider, Buck Migdal, Chartered; Snider, Buck, Migdal Myers, Chartered; and Sarah Arthur (the State Defendants). See Exh. 1 to P. 20. Peltz sued the State Defendants (with exception of FMI, Inc.) in the Circuit Court for Queen Anne's County. See Exh. 24 to P. 26.
Although the record is unclear which of the two complaints governs the State Case, both complaints asserted three counts against the State Defendants: tortious interference with contract, malicious use of process, and civil conspiracy. Compare Exh. 1 to P. 20 with Exh. 24 to P. 26. A fourth count, which asserted "negligence/legal malpractice," is alleged to have been withdrawn at the time of Insley's bankruptcy.
With the State Case stayed on account of Insley's bankruptcy, Plaintiffs, Peltz and Sharpel, filed the instant complaint (Bankruptcy Complaint) against Insley to determine the nondischargeability of debt allegedly owed by Insley to Sharpel and Peltz. The Bankruptcy Complaint asserts that debts arising from the following four counts against Insley are nondischargeable as to Peltz and Sharpel: tortious interference with contractual relations, tortious interference with prospective advantage, "abuse of process/malicious use of process," and civil conspiracy.
Shortly after Peltz and Sharpel filed the Bankruptcy Complaint, this court granted Migdal, Myers' motion to intervene as co-defendants in the underlying adversary proceeding. Migdal, Myers then filed a cross-complaint against Insley to determine nondischargeability of any debts for indemnity or contribution that Insley may be found to owe Migdal, Myers.
At the time the State Case was stayed, the parties were prepared to argue various summary judgment motions that were pending in the Circuit Court for Anne Arundel County. Because the counts in the Bankruptcy Complaint are virtually identical to the counts in the State Case, the Plaintiffs, Insley, and Migdal, Myers agreed to resolve all issues in the State Case by way of the instant adversary proceeding. To this end, Defendants Insley and Migdal, Myers filed separate motions for summary judgment in the bankruptcy court. Plaintiffs then filed a cross motion for summary judgment. Such are the motions that are before the court and will be resolved in this Memorandum.
Although Plaintiffs' Bankruptcy Complaint differs from the State Court Complaint insofar as it does not seek damages from Migdal, Myers, Plaintiffs and Defendants stipulated at oral argument that they seek to resolve all State Case issues in the bankruptcy court as part of this adversary proceeding. Plaintiffs and Defendants also stipulated to the authenticity of all exhibits that were attached to their respective motions.
I. Limitations
The first issue before the court is whether certain of Plaintiffs' claims are barred by limitations. While all of the state law causes of action asserted by Plaintiffs in the Bankruptcy Complaint would be barred by limitations because they arose more than three years prior to the filing of the Bankruptcy Complaint, see MD. CODE ANN., CTS. JUD. PROC. § 5-101 (1998 Rep. Vol.), Migdal, Myers represented to the court in oral argument that it was waiving its limitations defense as to the those counts in the Bankruptcy Complaint that are identical the counts asserted in the State Case; viz., tortious interference with contract, malicious use of process, and civil conspiracy. On the basis of the parties' stipulation at oral argument that they intended to resolve all State Case issues in the bankruptcy court, the court infers that Insley also waives his statute of limitations defense as it applies to the Bankruptcy Complaint counts that are identical to the State Case counts. Migdal, Myers asserts, however, that it does not waive its limitations defense as to counts asserted in the Bankruptcy Complaint that weren't originally plead in the State Case; viz., tortious interference with prospective advantage and abuse of process. Further, Migdal, Myers contends, these causes of action rely on different operative facts and therefore are not subject to the doctrine of relation back.
The doctrine of relation back provides that where a new cause of action is added to an otherwise timely complaint, such addition will not offend the statute of limitations where the new cause of action relies on the same facts that were relied upon in the original complaint. See Priddy v. Jones, 81 Md. App. 164, 169-70 (1989). "[M]erely changing legal theory does not constitute a new and different cause of action for purposes of the statute of limitations; the material operative facts, not the legal theory, determine the cause of action." Id. Plaintiffs' State Complaint included a count for tortious interference with contractual relations. This tort requires, in addition to all the elements of tortious interference with prospective advantage, that the plaintiff prove the existence of a contract, the defendant's knowledge of the contract, and breach thereof. Compare Fraidin v. Weitzman, 93 Md. App. 168, 189 (1992) with Natural Design, Inc., et al. v. The Rouse Co., 302 Md. 47, 71 (1984). Therefore, in pleading tortious interference with prospective advantage in the Bankruptcy Complaint, Plaintiffs have not asserted a new cause of action because the facts necessary to prove tortious interference with prospective advantage are subsumed by those facts necessary to prove tortious interference with contract. Plaintiffs' count for tortious interference with prospective advantage is thus timely by reason of the doctrine of relation back. Plaintiffs' State Court complaint included a count for malicious use of process but did not include a count for abuse of process. The Maryland Court of Appeals has distinguished these torts as follows:
References to Plaintiffs' State Court complaint refer to both Exh. 24 to P. 26 (Peltz's complaint filed in the Circuit Court for Queen Annes' County) and Exh. 1 to P. 20 (Sharpel's complaint filed in the Circuit Court for Anne Arundel County). As stated previously, all parties at oral argument represented that these two cases were consolidated in the Circuit Court for Anne Arundel County as Case No. C-95-221970C. Both complaints assert the same counts, and for the purposes of this Memorandum this court will regard them as one complaint.
The elements of tortious interference with prospective advantage are:
(1) intentional and willful acts by defendant;
(2) calculated to cause damage to the plaintiffs in their lawful business;
(3) done with the unlawful purpose to cause such damage and loss, without right or justifiable cause on the part of the defendants (which constitutes malice); and
(4) actual damage and loss resulting to plaintiff. See Natural Design Inc., et al. v. The Rouse Co., 302 Md. 47, 71 (1984). The elements of tortious interference with contract are:
(1) Existence of a contract or legally protected interest between plaintiff and a third party;
(2) Defendant's knowledge of that contract;
(3) Defendant's intentional and without justification inducement of the third party to breach or otherwise render impossible performance of the contact or interest;
(4) Third party's subsequent breach or making performance of contract or interest impossible; and
(5) Plaintiff suffering damages therefrom.
See Stannard v. McCool, 198 Md. 609 (1951).
"An action for abuse of process differs from actions for malicious prosecution and malicious use of process in that abuse of process is concerned with the improper use of criminal or civil process in a manner not contemplated by law after it has been issued, without the necessity of showing lack of probable cause or termination of the proceeding in favor of the plaintiff, while actions for malicious prosecution and malicious use of process are concerned with maliciously causing criminal or civil process to issue for its ostensible purpose, but without probable cause."
Keys v. Chrysler Credit Corp., 303 Md. 397, 411 (1985) (quoting Walker v. American Security Trust Co., 237 Md. 80, 87 (1964)). Although Plaintiffs' State Court complaint asserts that "Defendants filed and maintained the Complaint with knowledge that the Complaint would result in a lis pendens against Lot 32 . . ." see Exh. 1 to P. 20, 6 43 (emphasis added), this does not amount to an assertion that Defendants used civil process in a manner not contemplated by law after its initial issuance. The mere maintenance of a suit filed without probable cause does not constitute an abuse of process. See Keys, 303 Md. at 412. Plaintiffs' Bankruptcy Complaint count for abuse of process would thus have to rest on different operative facts than those necessary to support a claim for malicious use of process, and consequently does not benefit from the doctrine of relation back. There being no genuine issue of material fact, the court will therefore grant summary judgment in favor of Defendants Insley and Migdal, Myers that Plaintiffs' cause of action for abuse of process is barred by limitations.
II. Standing
Defendants Migdal, Myers also challenge Peltz's standing on all counts in the Bankruptcy Complaint. Under Maryland law, an action for damages for an injury to a corporation can be brought only in the name of the corporation, and not by an individual stockholder though the injury may have caused a reduction in the value of the stock. See Waller v. Waller, 187 Md. 185, 189 (1946). Migdal, Myers contends that all injuries alleged by Plaintiffs were to the legal rights of Sharpel. Sharpel is a corporation; Peltz is an equity holder in and creditor of Sharpel. At oral argument, Peltz conceded that he had no independent standing as to the counts for abuse of process and malicious use of process. As to the remaining counts, the court finds that Peltz does have standing because the Bankruptcy Complaint alleges that Peltz's legal rights were infringed upon. Specifically, the Bankruptcy Complaint alleges that Peltz personally lost a developer's consulting fee as a result of Defendants' wrongful conduct. See Bankruptcy Complaint 6 17.
The court notes that Peltz's alleged lost developer's consulting fee is the only basis for Peltz's standing. Peltz's argument that he has equal standing with Sharpel for the injuries to Sharpel is without foundation. The fact that Peltz funded Sharpel with personal assets does not, by itself, give Peltz standing for torts committed against Sharpel. See Waller, 187 Md. at 189-92. As an equity holder of Sharpel, Peltz may attempt to bring a derivative action against Sharpel's tortfeasors, but even in that capacity Peltz's standing would be merely derivative of Sharpel's. See id.
Peltz also argues that his status as a guarantor of Sharpel's liabilities supports his standing for harms inflicted upon Sharpel. Aside from the fact that nowhere in Peltz's Bankruptcy Complaint does he allege that he guaranteed Sharpel's debts, a guarantor subrogates to the rights of the obligee-not the obligor. See MD. CODE ANN., COMM. LAW. I § 3-419(e) (1997 Repl. Vol.); 174 AM. JUR. 2D, SURETYSHIP §§ 168, 171 (1974); Flojo International, Inc. v. Lassleben, 4 Cal.App.4th 713, 722-23, 6 Cal.Rptr.2d 99, 17 U.C.C. Rep.Serv.2d 532 (Cal.Ct.App. 1992). Thus, to the extent Peltz paid on guarantees in favor of Sharpel, Peltz has a claim against Sharpel for reimbursement. For the same reason that an equity holder does not have direct standing to assert a corporation's cause of action, Peltz does not have standing on account of his status as a guarantor and creditor.
Lastly, Peltz's financial loss stemming from his lost investment in Sharpel does not give him standing against Sharpel's tortfeasors. Injury alone does not create standing; legal rights must be invaded to create an actionable wrong. See Debnam v. Simpson, 124 Md. 354, 92 A. 782, 783 (1914).
III. Summary Judgment Standard
Pursuant to Fed.R.Civ.P. 56(c), made applicable by Fed.R.Bankr.P. 7056, summary judgment is proper where "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). See also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986). A material fact is one that might affect the outcome of the suit, see id., 477 U.S. at 248; a genuine issue of material fact exists where "the evidence is such that a reasonable jury could return a verdict for the non-moving party." Id. at 248-49.
In determining the facts for summary judgment purposes, the court may rely on affidavits made with personal knowledge that set forth specific facts otherwise admissible in evidence and sworn or certified copies of papers attached to such affidavits. Fed.R.Civ.P. 56(e), made applicable by Fed.R.Bankr.P. 7056 The particular forms of evidence mentioned in Rule 56 are not the exclusive means of presenting evidence, however, and the court may consider any material that would be admissible or usable at trial. See 10A CHARLES ALLEN WRIGHT ET AL., FEDERAL PRACTICE AND PROCEDURE § 2721 (1998). For example, the court must consider the material submitted by both parties. See id. (citing Wyant v. Crittenden, 113 F.2d 170, 173 (D.C. Cir. 1940)). While documents must be authenticated by and attached to an affidavit that meets the requirements of Fed.R.Civ.P. 56(e), uncertified or otherwise inadmissible documents may be considered by the court if not challenged. See 10A CHARLES ALLEN WRIGHT ET AL., FEDERAL PRACTICE AND PROCEDURE § 2722 (1998). The objection to admissibility must be timely or it will be deemed to have been waived. See id.
Where the nonmovant has the burden of persuasion at trial, the movant can satisfy its summary judgment burden of production in either of two ways. The movant may submit evidence that negates an essential element of the nonmovant's claim, or it may show that the nonmovant's evidence is insufficient to establish an essential element of the nonmovant's claim. See Celotex Corporation v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). A conclusory assertion that the nonmovant has no evidence to support its claim will not satisfy the movant's summary judgment burden of production. See id. at 328 (White, J., concurring), 332 (Brennan, J., dissenting).
Mindful of the fact that summary judgment is "an extreme remedy and one which is not to be entered unless the movant has established his right to a judgment with such clarity as to leave no room for controversy and that the other party is not entitled to recover under any discernible circumstances," Bellflower v. Pennise, 548 F.2d 776, 777 (8th Cir. 1977), and the parties having stipulated to the authenticity to all of the exhibits, the court will proceed to the substance of the parties' motions.
IV. Facts
The locus of dispute in this proceeding is a parcel of real estate with frontage on the Spa Creek in Annapolis, Maryland, known as lot 32R. In March, 1992, Insley purchased lot 30R from Sharpel pursuant to a purchase agreement dated January 20, 1992. Lot 30R and lot 32R are adjacent, and a pier extends from lot 32R into Spa Creek. In January, 1993, Insley, through his attorneys, Snider, Buck Migdal, commenced a civil suit in the Circuit Court for Anne Arundel styled F. Martin Insley v. Sharpel Properties, Inc., Case No. C-93-00492, seeking specific performance and declaratory relief for certain promises that Sharpel allegedly made as part of its sale of lot 30R to Insley. Specifically, Insley alleged that Sharpel made the following promises to Insley: to provide Insley joint use and ownership of the pier extending from lot 32R; to provide Insley exclusive ownership of the "left finger pier"; to provide Insley "fee simple access" to the pier; to modify the building restriction line on lot 32R so as to protect the view of the creek from lot 30R; and to provide Insley with a one-year right of first refusal for lot 32R. See Exh. 1 to P. 14. In August, 1993, Annapolis Federal Savings Bank foreclosed on lot 32R and sold it at auction. Plaintiffs allege that the buyer was FMI Enterprises, Inc., a corporation alleged to be owned by Insley. Insley's suit against Sharpel was dismissed without prejudice in November, 1993. See P. 8, 6 41.
Plaintiffs contend that Insley's suit was the culmination of a series of efforts to prevent Sharpel from selling lot 32R to anyone other than Insley. Specifically, Plaintiffs contend that Insley threatened prospective purchasers, uprooted "for sale" signs, caused two bona fide purchasers, Thomas Carruthers and William Carraway, to withdraw offers that they had made for lot 32R, and interfered with Sharpel's workout agreement with its mortgagee, Annapolis Federal Savings Bank. In addition to these actions, Plaintiffs argue that Insley's suit was meritless, and that Insley and his attorneys knew as much because the promises sued upon were unenforceable under the Statute of Frauds. Plaintiffs sued Insley and his attorneys for malicious use of process, tortious interference with contract, and civil conspiracy, and negligence/malpractice in the State Case described above.
V. Motions Sub Judice
Before the court are Defendants Migdal, Myers' motion for summary judgment, Defendant Insley's motion for summary judgment, and Plaintiffs' motion for summary judgment, styled as "Plaintiff's Memorandum in Opposition to Attorney Defendant's Motion for Summary Judgment and in Support of Plaintiff's Motion for Summary Judgment." Also before the court are Migdal, Myers' "Reply to Plaintiff's Opposition to Defendants Motion for Summary Judgment and Opposition to Plaintiffs' Motion for Summary Judgment" and Migdal, Myers' Opposition to Plaintiffs' Motion for Summary Judgment.
VI. Debtor's Motion on the Issue of Nondischargeability
Debtor Defendant Insley moves for summary judgment on the issues of both his liability on the underlying state law causes of action and whether liability, if any, on these claims should result in a nondischargeable debt to Plaintiffs. The court will address Insley's motion as it relates to his liability on the state law causes of action below; here, the court addresses Insley's contention that Plaintiffs have produced no evidence to support their claim that Insley's debts to them are nondischargeable. Section 523(a)(6) of the Bankruptcy Code excepts from discharge any debt "for willful and malicious injury by the debtor to another entity or to the property of another entity." 11 U.S.C. § 523(a)(6). In Kawaauhau v. Geiger, 523 U.S. 57, 118 S.Ct. 974, 140 L.Ed.2d 90 (1998), the Supreme Court interpreted § 523(a)(6) as requiring the intent to injure on the part of the debtor. Section 523(a)(6) does not apply to willful acts that cause injury unless such acts were performed with the intent to injure the creditor. See Kawaauhau, 118 S.Ct. at 977.
A genuine issue of material fact exists on the issue of whether Insley's acts evince an intent to injure the Plaintiffs. Plaintiffs allege that "Insley threatened Plaintiffs that he would do whatever was necessary to prevent Plaintiffs from selling [lot 32R] the lot to anyone but himself, including the filing of a lawsuit." P. 32 (Plaintiff's Answers to Interrogatories). While such a threat might merely reflect Insley's intent to protect what he regarded was rightfully his and hence not be indicative of a specific intent to injure, the court is required to make all justifiable inferences in favor of the nonmovant on a motion for summary judgment. See Anderson, 477 U.S. at 255, 106 S.Ct. at 2513-14. In light of the tenuous nature of Insley's suit, see Exh. 16 to P. 20 (letter from James Myers to Insley), the court finds that a fact finder could reasonably infer that Insley's actions arose out of an intent to injure Plaintiffs. Consequently, the court will deny Insley's motion for summary judgment as it relates to the issue of nondischargeability.
VII. Tortious Interference With Contract — Count I
Plaintiffs and Defendants have filed cross motions for summary judgment on the issue of whether Defendants' actions constituted tortious interference with contract. To recover on an action for this tort, a plaintiff must establish the following elements:
(1) a contract between plaintiff and a third party;
(2) defendant's knowledge of that contract;
(3) defendant's inducing the third party to breach the contract by wrongful or unlawful means;
(4) the third party's subsequent breach of the contract; and
(5) resulting damages to the plaintiff.
See Fraidin v. Weitzman, 93 Md. App. 168, 189 (1992). As to the third element, the Maryland Court of Appeals has explained the concept of "wrongful or unlawful means":
[T]he mere fact that a party acts from a bad motive or maliciously does not necessarily make him liable. If he has the right to act, his motive in acting cannot of itself make his act wrongful, but if he had no right to procure a breach of contract and resorts to unlawful means in doing so, he is liable to the injured party. We say `unlawful means' because a party may be the means of causing a contract to be broken and still not be liable. To illustrate, A may advertise his goods for sale at such a low rate as to result in a breach of contract by B, who was under contract with C, to buy at a higher price, but that would not make A liable to C. . . . [In contrast,] if [A] refused to furnish [B] if [B] furnished [C], although it knew [B] was under a contract to do so, in order to get the business of [C] for itself on its own terms, then it [would be] unlawful to thus interfere with the contract between [B] and [C].
Knickerbocker Ice Co. v. Gardiner Dairy Co., 107 Md. 556, 567 (1908).
With exception of one affidavit, which was submitted to the court after the hearing on the parties' cross motions, Plaintiffs have failed to produce evidence that would raise a question of fact on the element requiring the existence of a contract between either of the Plaintiffs and a third party. Plaintiffs have supplied no written contracts for the sale of lot 32R. William Carraway's (Carraway) deposition testimony, at most, supports the inference that he withdrew his offer to purchase lot 32R. See Exh. 9 to P. 20. Likewise, Plaintiff's. Exh. 10 to P. 20, an addendum to an offer to purchase lot 32R, merely represents Carraway's written offer to purchase lot 32R and to pay a developer's fee to David and Sharon Peltz. As to Thomas Carruthers' (Carruthers) interest in lot 32R, Peltz admitted in deposition that Carruthers never made an offer on lot 32R, but rather that Peltz and Carruthers had merely been negotiating. See Exh. 11 to P. 20 at 424.
At oral argument, Plaintiffs' counsel argued that Peltz lost a joint venture agreement as a consequence of Defendants' acts. Up to the date of the hearing, however, the only evidence in support of such a joint venture agreement was Plaintiff's Exh. 10, which was Carraway's offer to purchase lot 32R and pay David and Sharon Peltz $22,000 as a "developer's consulting fee." See Exh. 10 to P. 20.
Plaintiffs produced no evidence that they accepted Carraway's offer and thereby entered into a contract with him.
On March 4, 1999, two days after the hearing on the parties' cross motions for summary judgment, Plaintiffs filed a Notice of Filing Amended Exhibits, containing what was purported to be a corrected version of Plaintiff's Exh. 5 as well as numerous new exhibits. One such new exhibit was an affidavit of Russell Brown dated November 7, 1997. In that affidavit, Mr. Brown describes the terms of a joint venture that he had planned with Peltz and Sharpel, and further states:
Mr. Peltz and I had reached an agreement in principal [sic] to all the details when I was advised that a lawsuit was threatened and then filed. If not for this legal action, I would have entered into the Joint Venture with Mr. Peltz and Sharpel Properties without reservation.
Exh. 19 to P. 23 (Affidavit of Russell Brown).
Mr. Brown's affidavit constitutes a tenuous basis at best for finding an issue of material fact whether Peltz and Sharpel were parties to a contract with Russell Brown. The only possible agreement that could be found is an oral agreement, in principle, to all the details, that would have permitted Mr. Brown to have entered into a Joint Venture, which he did not. The Joint Venture agreement is the contract that, if breached, would satisfy the breach element of Plaintiffs' cause of action. Plaintiffs and Mr. Brown never entered into a Joint Venture agreement; Defendants could not have induced Mr. Brown to breach it, and Mr. Brown never breached a Joint Venture Contract with either Plaintiff. The only suggestion of a contract was an agreement to details in principle that would have been in a Joint Venture agreement that never came into existence.
Nevertheless, the court will not rely on Mr. Brown's affidavit. Cf. Pheil v. Rogers, 757 F.2d 850, 857-58 (7th Cir. 1985) (affirming district court's refusal to consider affidavits filed after previously-announced filing deadline). Rule 56(d) provides that the adverse party may serve opposing affidavits prior to the day of the hearing. See Fed.R.Civ.P. 56(d), made applicable here by Fed.R.Bankr.P. 7056. While the court "may permit affidavits to be supplemented or opposed by depositions, answers to interrogatories, or further affidavits," Fed.R.Civ.P. 56(e), Plaintiffs' attempt to submit Brown's affidavit is neither a supplement to an existing affidavit nor offered in opposition to any of Defendants' affidavits. Moreover, permitting Plaintiff's to submit such an affidavit at this juncture-where the affidavit was written over a year before the hearing-would reward Plaintiffs' failure to timely submit its exhibits in opposition to Defendants' motion, prejudice the Defendants, and unnecessarily delay the court's resolution of the motion. One purpose of summary judgment is to promote expeditious disposition of cases. The court scheduled a hearing on the motions for the purpose of framing the issues, and the Plaintiffs instead attempted to use the hearing as a means of discovering the weakness in their case. Plaintiffs had ample notice of the hearing and did not request additional time for discovery.
Even if the court were to consider the Brown affidavit, not only is the affidavit subject to the infirmities described previously, but it does nothing to aid Plaintiffs' as to the second element of tortious interference with contract: that Defendants' had knowledge of Plaintiffs' contract with Brown.
Consequently, Plaintiffs have also failed to raise a question of fact as to the second element of tortious interference with contract.
In summary, Plaintiffs have failed to establish that they were parties to a contract, which is the first element to tortious interference with contract. The court disregards Plaintiffs' late-filed affidavit of Russell Brown. To the extent that the Brown affidavit could possibly have raised a question of fact on the issue of whether Plaintiffs were parties to a contract with Mr. Brown, which the court concludes it did not, Plaintiffs still have failed to raise a question of material fact on the issue of whether Insley or Migdal, Myers had knowledge of such contract. Because Plaintiffs have failed to raise a question of material fact as to at least two essential elements of their claim, the court will grant Defendants' motion for summary judgment on the count of tortious interference with contract and deny Plaintiffs' motion for summary judgment on this issue.
VIII. Tortious Interference With Prospective Advantage — Count II
Plaintiffs and Defendants have filed cross motions for summary judgment on the issue of whether Defendants' actions constituted tortious interference with prospective advantage. The elements of this tort are as follows:
(1) intentional and willful acts by the defendant;
(2) calculated to cause damage to the plaintiff in his or her lawful business;
(3) done with the unlawful purpose to cause such damage and loss, without right or justifiable cause on the part of the defendants (which constitutes malice); and
(4) actual damage and loss resulting to plaintiff.
See Natural Design, Inc., et al. v. The Rouse Co., 302 Md. 47, 71 (1984).
A. Defendant Migdal, Myers' Motion
Migdal, Myers argues that their filing of the State Case on behalf of Insley was not wrongful, and therefore cannot constitute tortious interference with prospective advantage. Although the court agrees with Migdal, Myers' premise that an attorney must act without probable cause and with an improper purpose in order for the attorney to be liable to the third party in tort, cf. Fraidin v. Weitzman, 93 Md. App. at 235 (holding that a plaintiff must establish that an attorney acted without legal justification and with the intent to injure the plaintiff in order to sustain a charge of conspiracy); RESTATEMENT (SECOND) OF TORTS § 674 cmt. d (1977) (stating that even if an attorney has no probable cause and is convinced that his client's claim is unfounded, the attorney is still not liable for wrongful use of civil process if he acts primarily for the purpose of aiding his client in obtaining a proper adjudication of his claim), genuine issues of material fact exist on the questions of whether Migdal, Myers had probable cause to sue Sharpel and whether Migdal, Myers acted with the intent to injure or harass Sharpel.
Migdal, Myers argues that it had probable cause to sue Sharpel, and therefore the court cannot find that Migdal, Myers actions were without right or justifiable cause. An attorney must satisfy a two-prong test in order to establish that he had probable cause to commence a suit. See Cottman v. Cottman, 56 Md. App. 413, 425 (1983). The first prong is that the attorney must have a subjective belief that the claim merits litigation. See id. The attorney need not believe that the client will prevail, nor must the attorney fully investigate the client's claim before bringing suit. See id. Rather, the attorney need only believe that the client has a tenable claim. See id.; see also MD. RULE PROF. CONDUCT 3.1, cmt. (stating that filing an action is not frivolous merely because the facts have not been fully substantiated or because the lawyer expects to develop vital evidence only by discovery). The second prong is that the attorney's subjective belief that the claim merits litigation is objectively reasonable. See Cottman, 56 Md. App. at 425-26. "The question is answered by determining that no competent and reasonable attorney familiar with the law of the forum would consider that the claim was worthy of litigation on the basis of the facts known by the attorney who instituted the suit." Id. (quoting Wong v. Tabor, 422 N.E.2d 1279, 1288 (Ind.App. 1981).
As evidence of the first prong, the attorney's subjective belief that the client's claim is tenable, Migdal, Myers refers to various letters between John Gordon and James Myers. John Gordon was Sharpel's attorney. None of the letters contain any statement by James Myers as to his subjective opinion of Insley's claim. Rather, the letters contain proposals, negotiations, and requests relating to the sale of lot 30R. Migdal, Myers points to no deposition testimony or affidavit by any of the Migdal, Myers attorneys who were responsible in filing the State Case in which the party's subjective belief is asserted. Apparently, Migdal, Myers would have the court infer Migdal, Myers' subjective belief in the tenability of Insley's claim from the letters between Gordon and James Myers. On a motion for summary judgment, the court is not required to make such an inference in favor of the moving party, and the letters do no not warrant such an inference. Migdal, Myers has failed to carry its summary judgment burden on the question of its subjective belief in the tenability of Insley's claim against Sharpel.
As to the second prong of probable cause, the objective reasonableness of its action, Migdal, Myers offers four reasons why Insley's suit against Sharpel was worthy of litigation. The court will examine them in turn.
(1) Satisfaction of the Statute of Frauds by various writings first, Migdal, Myers argues that the writing requirement of the Statute of Frauds was satisfied by the series of written communications between Insley, Sharpel, and their respective agents.
Specifically, Migdal, Myers refers to the following written communications:
* Exh. 10-A to P. 14, which is a memorandum by James Myers addressed to "file";
* Exh. 10-B to P. 14, which is a letter from James Myers to Dan Mellin;
* Exh. 10-C to P. 14, which is a letter from John Gordon to James Myers dated April 9, 1992;
* Exh. 10-D to P. 14, which is a letter dated April 16, 1999, James Myers to John Gordon in response to the latter's letter of April, 9, 1992;
* Exh. 10-E through 10-G, 10-I, and 10-K to P. 14, which are letters from James Myers to John Gordon requesting a response to James Myers' letter of April 16, 1999;
* Exh. 10-H to P. 14, which is a letter from James Myers to Insley;
* Exh. 10-L to P. 14, which is a letter from James Myers to John Gordon; and
* Exh. 7 to P. 14, which is the same as Exh. 10-C except that attached to it is a "First Right of Refusal" executed by Sharon Peltz, president of Sharpel, granting Insley a six month right of first refusal on lot 32R commencing March 20, 1992.
The provision of the Statute of Frauds involving executory contracts for the sale or disposition of land is codified in MD. CODE ANN., REAL PROP. § 5-104. This section provides as follows:
No action may be brought on any contract for the sale or disposition of land or of any interest in or concerning land unless the contract on which the action is brought, or some memorandum or note of it, is in writing and signed by the party to be charged or some other person lawfully authorized by him.
MD. CODE ANN., REAL PROP. § 5-104 (1996 Repl. Vol.). The Court of Appeals of Maryland has interpreted the writing requirement of the Statute of Frauds as requiring that the writing be signed by the party to be charged or by his agent and that the writing state with reasonable certainty (a) the parties to the contract, (b) the subject matter to which the contract relates, and (c) the terms and conditions of all promises constituting the contract. See Schremp v. Dubrowin, 257 Md. 623, 633 (1970). The writing requirement may be satisfied by reference to two writings if each indicates that it relates to the same transaction. See id. at 634.
Of all the exhibits offered by Migdal, Myers, the only one that is signed by Sharpel or Sharpel's agent is John Gordon's April 9, 1992 letter to James Myers. See Exhibit 10-C to P. 14. The purpose of this letter, according to Mr. Gordon, was to conclude "post settlement arrangements" between Sharpel and Insley by addressing "outstanding issues which I see as left on the table." Id. Gordon began the letter by stating his position that Sharpel went to settlement on lot 30R based on the understanding that Sharpel was not obligated to perform any "punch out" or change items and that any subsequent agreement between Sharpel and Insley as to additional work was not governed by the contract for lot 30R. Gordon then referenced an executed buyer's right of first refusal for lot 32R, which was enclosed with his letter. Gordon continued:
3. My understanding is that the parties agreed to the placement of a private rear building restriction line which is described by a line to be drawn at the rear of the foot-print. . . .
4. Sharpel warrants that it will continue to pursue the completion of the minor subdivision. I am informed that Inspections and Permits has signed off on it. In my experience that means that it has gone back to Planning and Zoning for their final signature. With regard to the private building restriction line discussed in Paragraph 3, it seems impractical to interrupt that process now and insert a private building restriction line on the plat. I would suggest instead the following:. . . .
5. You and I will draft an easement acceptable to our principals for access and use of the pier.
Id.
John Gordon's April 9 letter indicates that Sharpel's sale of lot 30R to Insley included Sharpel's promise to establish a building restriction line on lot 32R and to provide an easement for access to the pier on lot 32R. Thus, it appears that John Gordon's April 9 letter could satisfy the writing requirement as to Sharpel's promises regarding the building restriction line and the pier easement. This would suggest that Migdal, Myers had a reasonable basis for filing the suit against Sharpel to enforce these promises. However, the suit against Sharpel sought more than to merely enforce Sharpel's promises regarding the building restriction line and the pier easement. The suit against Sharpel also sought to enforce an alleged one-year right of first refusal in favor of Insley. See Exh. 1 to P. 14. Gordon's letter does not indicate that Sharpel promised to supply Insley with a right of refusal for a term of one year.
In fact, the executed "Buyer's Right of First Refusal," which was enclosed with the April 9 letter, was for a term of six months. Consequently, Gordon's letter of April 9, 1992, cannot have provided a reasonable basis for Migdal, Myers' attempt to enforce a one-year right of first refusal on lot 32R for Insley.
(2) Satisfaction of Statute of Frauds by admissions
Migdal, Myers also argues that it could reasonably have expected to satisfy the Statute of Frauds by evidence developed during the litigation process. Specifically, Migdal, Myers contends that the preclusive effect of the Statute of Frauds can be avoided if a party to be charged under the Statute or his agent admits under oath that the contract existed, and that Migdal, Myers reasonably expected that Sharpel or one of Sharpel's agents would confirm the promises that Insley sought to enforce. Migdal, Myers also contends that it could have reasonably expected to obtain writings from Sharpel by discovery that would have satisfied the Statute of Frauds.
Maryland law is clear that an admission of the existence of a contract by the party to be charged or his agent, under oath, satisfies the writing requirement of the Statute of Frauds. The Court of Appeals of Maryland has explained the rationale of this principle:
[T]he purpose of the Statute of Frauds is to protect a party, not from temptation to commit perjury but from perjured evidence against him. The purpose of evidence is to prove facts. Admissions of a party testifying, though in the form of evidence, are in essence not mere evidence, but make evidence against him unnecessary. . . . We think the Statute of Frauds requires no more.
Furthermore, admissions of a party in the form of testimony would constitute sufficient "memoranda" under Section 4 or Section 17, or "writings" under Section 7, of the statute. For this purpose we think recorded testimony should be regarded as equivalent to signed depositions.
Trossbach v. Trossbach, 185 Md. 47, 55-56 (1945). In Trossbach, the Court of Appeals affirmed a decree requiring a defendant to convey real property to a plaintiff on the ground that "the oral agreement which constituted an express trust for the plaintiff's benefit [was] admitted by the defendant in his testimony." Id. at 52. In Litzenberg v. Litzenberg, 307 Md. 408 (1986), the Court of Appeals stated that the Trossbach rule would apply to in-court admissions made through an agent, but held that the testimony relied on by the plaintiff in Litzenberg was not an in-court admission by the defendant because the witness was not the defendant's agent at the time he gave the testimony. See id. at 417.
On the basis of Litzenberg and Trossbach, the court concludes that an attorney satisfies the reasonableness prong for probable cause where he commences a suit to enforce a contract for the sale of land under the theory that the attorney will establish the writing required by the Statute of Frauds through an admission by the party to be charged with the contract. Thus, if Migdal, Myers in fact commenced the State Case under the theory that Sharpel's alleged promises regarding the building restriction, the pier easement, and the one-year buyer's right of first refusal could be enforced by means of an admission by Sharpel or one of Sharpel's agents, then the court would find that Migdal, Myers had probable cause to commence the suit against Sharpel. However, as mentioned above, Migdal, Myers has offered no evidence as to its subjective belief in the tenability of the case, let alone its theory of the case.
Plaintiff's argue that Litzenberg stands for the proposition "the open court testimony exception does not apply in cases pertaining to land contracts." P. 20 at 11. In support of this, Plaintiff's point to the following passage from Litzenberg: "Our cases also make it clear that the Statute of Frauds, at least as it applies to executory land contracts, is not satisfied by a finding that there was in fact an oral contract to transfer." Litzenberg, 307 Md. at 421.
Plaintiffs' error stems from their wrongfully regarding in-court admissions as an exception to the Statute of Frauds. Trossbach, which is quoted and adopted in Litzenberg, clearly states that an in-court admission satisfies the writing requirement of the Statute of Frauds. See Trossbach, 185 Md. at 55. To reach this conclusion, Trossbach relied on the legal fiction that spoken words, when in the form of testimony, constitute a writing for purposes of the Statute because the spoken words in that context are indistinguishable from a signed deposition. The court in Trossbach enforced the trust not because it found that the defendant had in fact declared a trust in favor of the plaintiff, which declaration would be invalid under Section 7 of the English Statute of Frauds, but rather because the court found that the defendant's testimony constituted a writing signed by the defendant. In-court admissions are not an exception to the Statute of Frauds; rather, in-court admissions take the case out of the Statute of Frauds.
Migdal, Myers also relies on a passage from Pearlstein v. Maryland Deposit Insurance Fund, 78 Md. App. 8 (1989) which purports to rely in Litzenberg in support of the proposition that "the oral testimony exception to the statute of frauds" does not apply to oral contracts concerning the disposition of land. See Pearlstein, 78 Md. App. at 19. It is unclear whether the Pearlstein court was disputing the availability of the in-court admission "exception" to all cases involving oral contracts for the sale of land or whether it held that the "exception" was not available under the facts in Pearlstein. If the former interpretation captures the Pearlstein court's holding, then Pearlstein is of questionable authority on this point in light of subsequent authority. See Mann v. White Marsh Properties, Inc., 321 Md. 111, 116-17 (1990) (ruling on a contract for the sale of land and citing Litzenberg for the proposition that "a deposition might satisfy the Statute of Frauds if it contains an admission of the existence of the contract."); see also Barranco v. Barranco, 91 Md. App. 415, 420-21 (1992).
Plaintiffs further argue that Migdal, Myers' actions lacked a good faith basis because the parole evidence rule precluded Insley from succeeding in the State Case, especially in light of the fact that the purchase agreement between Sharpel and Insley for lot 30R contained a merger clause. The court disagrees.
The parole evidence rule provides that, in the absence of fraud, duress, or mistake, parol or extrinsic evidence is not admissible to contradict or vary the terms of a written contract where the contract is complete and unambiguous. See Pumphrey v. Kehoe, 261 Md. 496, 504 (1971); Foreman v. Melrod, 257 Md. 435, 441 (1970). That is, a complete and unambiguous written contract is conclusively presumed to have expressed the entire contract between the parties. Delamater v. Chapell, 48 Md. 244 (1878). Under such circumstances, all prior and contemporaneous negotiations are merged in the written instrument, which is treated as the exclusive medium for ascertaining the extent of the obligations. See Markoff v. Kreiner, 180 Md. 150, 155 (1941).
The parole evidence rule is not applicable, however, where parol evidence is offered to establish that the contract is not complete. See 4500 Suitland Road Corp. v. Ciccarello, 269 Md. 444, 451 (1973). Migdal, Myers correctly contends that Sharpel's oral promises would have been admissible for the purpose of proving that the written purchase agreement between Sharpel and Insley was not complete. If Migdal, Myers were successful in establishing that the written purchase agreement was not the complete agreement between Sharpel and Insley, Migdal, Myers may have then introduced other written agreements, such as deposition testimony of Sharpel's agent, that would establish Sharpel's promises regarding the building restriction line, the pier easement, and the one-year buyer's right of first refusal. This is true notwithstanding the existence of a merger clause in the written purchase agreement dated January 20, 1992. Although the merger clause is evidence that the parties intended the written purchase agreement to be complete, it is not conclusive evidence. See Pumphrey, 261 Md. at 505; RESTATEMENT (SECOND) CONTRACTS § 216 cmt. e (1981) ("[S]uch a clause does not control the question whether the writing was assented to as an integrated agreement, the scope of the writing if completely integrated, or the interpretation of written terms."). Consequently, the court does not accept Plaintiffs' argument that Migdal, Myers' aiding in the filing of the suit against Sharpel was unreasonable on account of the strictures of the parole evidence rule.
Migdal, Myers has not satisfied its burden of showing the absence of a genuine issue of material fact on the question of whether it could reasonably have expected to obtain writings that would satisfy the Statute of Frauds through discovery.
(3) Satisfaction of Statute of Frauds by part performance
A third argument offered by Migdal, Myers in support of its contention that it had probable cause to instigate the suit against Sharpel is that the suit was excepted from the Statute of Frauds by operation of the doctrine of part performance. Specifically, Defendants argue that Sharpel's recording a deed of easement and a revised minor subdivision plat after the closing on lot 30R constituted part performance of its oral promises to Insley, and that partial performance of an oral agreement is a recognized exception to the Statute of Frauds.
Defendants are correct in identifying the doctrine of part performance as an exception to the Statute of Frauds, but they are incorrect in applying it. The basis for the doctrine of part performance is to prevent fraud on a promisee who performs in reliance on a parol agreement. See 73 AM. JUR. 2D, STATUTE OF FRAUDS § 399, 411 (1974). This doctrine provides that part performance of a parol contract, subject to certain conditions concerning the nature and extent of the performance, will take the contract out of the Statute of Frauds. See id. § 397. In Shives v. Borgman, 194 Md. 29 (1949), the Maryland Court of Appeals described what a plaintiff must show in order to invoke the doctrine of part performance:
The terms of the contract must be clear and definite and must be affirmatively established by strong and convincing evidence. The acts performed by the complainant should also be clear and definite and solely with the view to the performance of the alleged contract. The acts performed must be of a substantial nature and must be such that the complainant would suffer injury amounting to a fraud as a result of the promisor's failure to carry out the agreement.
Id. at 35 (emphasis added).
Defendants' misapplication of this doctrine stems from their pointing to Sharpel's post-closing actions as the acts that constitute the part performance. As applied in Maryland, the doctrine of part performance requires the requisite acts to have been performed by the plaintiff-promisee. See Unitas v. Temple, 314 Md. 689 (1989) (holding that promisee's actions in renewing personal relationship with fianci did not warrant application of the doctrine of part performance); Shives, supra (holding that promisee's leaving home in Cumberland to nurse an amputee in his Hancock home constituted actions sufficient to render an oral contract to make a will enforceable); see also, 73 AM. JUR. 2D, STATUTE OF FRAUDS, § 411 (1974) ("Part performance by the party sought to be charged does not take an agreement out of the statute of frauds."). Consequently, Sharpel's post-closing recording of the deed of easement and the minor subdivision plat cannot have served as a justification for Insley's suit.
Considering the acts performed by Insley, the court doubts that Migdal, Myers could point to actions by Insley that are clear and definite and solely with the view to the performance of the alleged contract. In Unitas, the Maryland Court of Appeals described what a court must find before invoking the doctrine of part performance:
"[T]he court shall, by reason of the act itself, without knowing whether there was an agreement or not, find the parties unequivocally in a position different from that which, according to their legal rights, they would be in if there were no contract."
Unitas, 314 Md. at 709 (quoting Dale v. Hamilton, 5 Ha. 369, 381 (1846), as appearing in J. POMEROY, SPECIFIC PERFORMANCE OF CONTRACTS § 107, at 259 n. 2 (3d ed. 1926)). The Maryland cases that have invoked the doctrine of part performance doctrine to take a case out of the Statute of Frauds generally require the buyer to have made payment, taken possession, and/or made substantial improvements to the subject property. See Snyder v. Snyder, 79 Md. App. 448, 454-55 (1989) (citing cases), overruled on other grounds by Pavel v. Johnson, 342 Md. 143, 166 n. 29 (1996). According to Insley's complaint, the only action that Insley took in reliance on Sharpel's alleged promise was Insley's disbursement of the funds to complete the closing on lot 30R. See Exh. 1 to P. 14. This action can hardly be one that would allow a court to find that Insley and Sharpel were unequivocally in a position different from that which they would have been in if there were no contract relating to the building restriction, the pier easement, and the one-year right of first refusal. For this reason, the court rejects Migdal, Myers' argument that the doctrine of part performance supplied a reasonable basis for Migdal, Myers' aiding in the commencement of Insley's suit.
(4) Promissory Estoppel
Lastly, Migdal, Myers argues that the doctrine of promissory estoppel would have allowed Insley to enforce Sharpel's alleged oral promises regarding the building restriction line, the pier easement, and the one-year right of first refusal. Promissory estoppel, referred to as detrimental reliance by the Court of Appeals of Maryland, see Pavel, 342 Md. at 146 n. 1, can be invoked as a means of enforcing promises that would otherwise be unenforceable under the statute of frauds. See Snyder, 79 Md. App. at 457. The elements of detrimental reliance are as follows:
1. a clear and definite promise;
2. where the promisor has a reasonable expectation that the offer will induce action or forbearance on the part of the promisee;
3. which does induce actual and reasonable action or forbearance by the promisee; and
4. causes detriment which can only be avoided by the enforcement of the promise.
See Pavel, 342 Md. at 166. The promisee's reliance must be "substantial and definite" in order for the court to compel enforcement of the promise. Cf. Union Trust Company of Maryland v. Charter Medical Corp., 663 F. Supp. 175, 178 (D.Md. 1986) ("Estoppel is not to be invoked unless injustice will result if the promise is not enforced."); Pavel, 342 Md. at 166 n. 29 ("If the reliance is not `substantial and definite' justice will not compel enforcement.").
For the same reason that Migdal, Myers' argument regarding the doctrine of part performance failed, Migdal, Myers' contention that promissory estoppel supplies a reasonable basis for Insley's suit must also fail. The complaint in Insley's suit alleged that Insley disbursed funds to complete the settlement on lot 30R in reliance on Sharpel's alleged oral promises relating to the building restriction line, the pier easement, and the one-year right of first refusal. While such disbursement is substantial in view of the amount of money disbursed, it is certainly not so definite as would cause a court to conclude that an injustice would result if Sharpel's alleged oral promises were not enforced. Insley's action in disbursing the funds to compete the settlement on lot 30R is entirely consistent with the conclusion that Sharpel did not promise to place a building restriction on lot 32R, to grant Insley an easement to the pier on lot 32R, and to grant Insley a one-year right of first refusal on lot 32R. Insley alleged no acts that were so definite as to suggest that they were taken in reliance on Sharpel's promises relating to lot 32R. Therefore, the court rejects Migdal, Myers' argument that promissory estoppel supplied a reasonable basis for their aiding in the commencement of Insley's suit against Sharpel.
Even if Migdal, Myers lacked probable cause to bring the suit against Sharpel, Migdal, Myers would still not be liable in tort to Sharpel if the court were to find that Migdal, Myers acted primarily for the purpose of aiding Insley. See RESTATEMENT (SECOND) OF TORTS § 674 cmt. d. ("[E]ven if [an attorney] has no probable cause and is convinced that his claim is unfounded, he is still not liable if he acts primarily for the purpose of aiding his client in obtaining a proper adjudication of his claim.").
Questions of intent, however, are generally not suitable for resolution at the summary judgment stage, and the court finds this to be the case here. Because a fact finder might find that Migdal, Myers lacked probable cause to file the suit against Sharpel, a fact finder might infer that Migdal, Myers acted with the intent to injure or harass Sharpel. Cf. Kelly-Springfield Tire Co. v. D'Ambro, 596 A.2d 867, 872 (Pa.Super.Ct. 1991) (holding that an attorney can be liable for tortious interference with prospective business relations where the attorney files a civil suit with the intent to harass a defendant because harassment does not serve to protect a legally recognized interest of the client).
In summary, Migdal, Myers has failed to meet its summary judgment burden on the count of tortious interference with prospective advantage. Specifically, Migdal, Myers has failed to establish that its action in aiding Insley to sue Sharpel was not "done with the unlawful purpose to cause such damage and loss, without right or justifiable cause on the part of the defendants (which constitutes malice)." Natural Design, Inc., 302 Md. at 71. While an attorney's having probable cause to file a suit is sufficient to bar a claim against the attorney for tortious interference with prospective advantage, Migdal, Myers has failed to establish the absence of a genuine issue of material fact on the question of whether it had probable cause to file the suit against Sharpel. This is because Migdal, Myers has not offered sufficient evidence on its subjective belief in the tenability of Insley's claim. Moreover, with the exception of the in-court admission "exception" to the Statute of Frauds, all of the arguments put forth by Migdal, Myers fail to supply an objectively reasonable basis for Insley's suit against Sharpel. Finally, Migdal, Myer's intent in filing the suit against Sharpel is a material issue of fact on the question of whether Migdal, Myers' actions constituted tortious interference with prospective advantage. Therefore, the court will deny Migdal, Myers' motion for summary judgment on the count of tortious interference with prospective advantage.
B. Defendant Insley's Motion
Insley's motion for summary judgment adopts Migdal, Myers' arguments on the predicate state law claims. The court has denied Migdal, Myers motion for summary judgment on the count of tortious interference with prospective advantage. Although the court has stated that a suit to enforce an oral contract is not per se without justifiable cause in light of the in-court admission "exception" to the Statute of Frauds, see Part A.2 supra, it does not follow that all suits to enforce an oral contract for the sale of land are justified for purposes of determining whether a claim for tortious interference with prospective advantage exists. The question of whether an act is performed with justifiable cause should include an inquiry into both the actor's subjective belief and the objective reasonableness of such belief at the time that the act is performed. Cf. RESTATEMENT (SECOND) OF TORTS § 767 cmt. c. ("The [prosecution of civil suits] is wrongful if the actor has no belief in the merit of the litigation or if, though having some belief in its merit, he nevertheless institutes or threatens to institute the litigation in bad faith, intending only to harass the third parties and not to bring his claim to definitive adjudication."); BLACK'S LAW DICTIONARY 865 (6th ed. 1990) (defining justifiable cause as the "well founded belief of person of ordinary caution, prudence, and judgment in existence of facts essential to prosecution.") (emphasis added). To hold otherwise would allow an individual to file a lawsuit in bad faith with the intent to cause damage to another if the individual can, after the fact, cobble together a legal theory which could support his or her claim. This would be a perverse result.
Insley has not met his burden of establishing that there is no genuine issue as to whether he instituted the suit against Sharpel "with the unlawful purpose to cause such damage and loss, without right or justifiable cause on the part of the defendants (which constitutes malice)." Natural Design, Inc., 302 Md. at 71. This it true notwithstanding Insley's deposition testimony that he instituted the suit under the expectation that John Gordon would testify under oath that Sharpel promised to grant Insley a one-year right of first refusal on lot 32R. See Exh. 6 to P. 14 (Insley Dep.). David Peltz testified in a deposition that Insley had previously made bad faith threats to instigate litigation:
Q: All right. How many other versions of a contract between you and Mr. Insley existed? You have identified two. You have identified the original one that was done on January 20, which had attached to it this addendum that we have been talking about. You talked about the second one which you backdated to January 20th, `92, and added the four items under Special Conditions and got rid of the addendum or the separate sheet of addendum. Were there any other contracts?
A: Yes. Marty called me a couple of weeks after the ratification of the first contract.
Q: Of the first contract, the one that was actually prepared on January 20th?
MS. CRUZ: When you say ratified, you mean the one signed by Sharon?
THE WITNESS: Yes.
A: You will notice that the addendum was not ratified, so that was not part of the contract. I think Marty and I prepared one that was for — its value to Sharpel was somewhere around 525. I take it to Sharon, Sharon and I discuss it, she ratifies it, we have a contract. We have a ratified, fully executed contract. Marty calls me about two weeks later, and I will paraphrase, I got up today out of bed and decided I didn't want to pay that much money for the house. Come over and talk to me. So I went over and talked to him.
Q: And at this point you had a signed contract?
A: Yes.
Q: What happens?
A: Well, I said Marty, what are you talking about? He says I just don't want to pay that much for the house. I said, you want out of the contract? No, I don't want out of the contract, I want to buy the house, I just don't want to pay that much for it. I said you can't do it. It is a real estate contract, you can't just unilaterally change the terms and conditions. If you want out, I will let you out. I have this other guy, he wants to buy it. I will deal with him. He said no, I want the house. I said, you can't just do that. I don't have to agree to change the terms and conditions. He said well, I will sue your ass then. I said you're what? He says, I will tie it up in a lawsuit. I will say you breached the contract or something, and that's the way it's going to be.
Exh. 11 to P. 20 (Peltz Dep. at 84-86). From this testimony, a fact finder could reasonably infer that Insley's suit against Sharpel was motivated not by a desire to enforce a contractual right, but rather for the purpose of extracting from Sharpel certain benefits to which Insley was not contractually entitled.
As the court is required to make all justifiable inferences in favor of the non-moving party, see Anderson, 477 U.S. at 255, the court finds that there is a genuine issue of material fact as to whether Insley's suit against Sharpel was without right or justifiable cause.
Further, even if the court were to find that Insley's instituting the suit against Sharpel was with justifiable cause, this would not mean that Plaintiffs cannot satisfy the third element of tortious interference with prospective advantage. Plaintiffs' answers to interrogatories state that Insley threatened prospective purchasers and removed "for sale" signs from lot 32R. See P. 32 at pp. 2-4.
Insley does not dispute these allegations. These allegations also raise a genuine issue of material fact on the issue of Insley's subjective intent that precludes summary judgment in favor of Insley on this count.
C. Plaintiffs' Motion
Plaintiffs' motion for summary judgment against Migdal, Myers will be denied because there are genuine issues of material fact as to the second and third elements of tortious interference with prospective advantage. These elements involve questions of the actor's state of mind, and are generally not capable of being resolved on summary judgment.
Plaintiffs' motion for summary judgment against Insley will also be denied because there are genuine issues of fact as to Insley's intent in commencing his suit against Sharpel and whether Insley in fact threatened prospective purchasers and removed "for sale" signs.
IX. Malicious Use of Process — Count III
Plaintiffs and Defendants have filed cross motions for summary judgment on the issue of whether Defendants' actions constituted malicious use of process. The elements of this tort are as follows:
(1) a prior civil proceeding must have been instituted by the defendant;
(2) the proceeding must have been instituted without probable cause;
(3) the prior civil proceeding must have been instituted by the defendant with malice;
(4) the proceeding must have terminated in favor of the plaintiff; and
(5) that damages were inflicted upon the plaintiff by seizure of property or other special injury which would not necessarily result in all suits prosecuted to recover for a like cause of action.
See One Thousand Fleet Limited Partnership v. Guerriero, 346 Md. 29, 37 (1997).
There is no dispute that Peltz was not a party to a prior civil proceeding instituted by the Defendants. Insley's suit named Sharpel as the only defendant. See Exh. 1 to P. 14 (Complaint for Specific Performance, Declaratory, and Injunctive Relief). As Peltz is unable to raise a genuine issue of fact as to this essential element of his claim for malicious use of process, the court will grant Defendants' motion for summary judgment on the issue of malicious use of process as against Peltz.
A. Defendant Migdal, Myers' Motion
Migdal, Myers' has failed to establish that there is no genuine issue of material of fact as to whether Migdal, Myers' conduct constituted malicious use of process. Migdal, Myers focuses its argument on the second element of malicious use of process, arguing that there is no genuine issue of material fact that Migdal, Myers' had probable cause for filing the suit against Sharpel on behalf of Insley. The court has already found that there is a genuine issue of fact on the question of whether Migdal, Myers had probable cause to commence the suit, however, in denying Migdal, Myers' motion for summary judgment on the count of tortious interference with prospective advantage. For the same reason, then, the court will deny Migdal, Myers' motion for summary judgment on the count of malicious use of process.
B. Defendant Insley's Motion
Insley, who relies on Migdal, Myer's motion on the predicate state law claims, has also failed to establish the absence of a genuine issue of material fact that his instituting the suit against Sharpel was without malice. For the reasons stated in denying Insley's motion for summary judgment on the count of tortious interference with prospective advantage, the court will deny Insley's motion for summary judgment on the count of malicious use of process.
C. Plaintiff Sharpel's Motion
The court will deny Sharpel's motion for summary judgment against both Defendants because Sharpel has not established the absence of a genuine issue of material fact on the second and third elements for malicious use of process. These elements involve inquiry into the parties' subjective intent, and are generally not capable of being resolved on summary judgment.
X. Conspiracy — Count IV
Plaintiffs and Defendants have filed cross motions for summary judgment on Plaintiffs' count of civil conspiracy. To maintain a action for civil conspiracy, a plaintiff must prove the following elements:
(1) a confederation of two or more persons;
(2) an unlawful act in furtherance of the conspiracy; and
(3) actual legal damages resulting to the victim-plaintiff.
See Van Royen v. Lacey, 262 Md. 94, 97-98 (1971). In this context, a confederation is a combination of two or more persons operating under an agreement or understanding to accomplish an unlawful act or to use unlawful means to accomplish an act not in itself illegal. See Green v. Washington Suburban Sanitary Commission, 259 Md. 206, 221 (1970). An unlawful act is not necessarily a criminal act, but any act, committed knowingly, that violates a legal right. See Knoche v. Standard Oil Co., 138 Md. 278, 282 (1921).
A. Defendants' Motions
Because there are genuine issues of material fact as to whether Migdal, Myers and Insley committed the torts of malicious use of process and tortious interference with prospective advantage, there also exist genuine issues of material fact as to (i) whether Migdal, Myers and Insley acted under an agreement or understanding to accomplish those torts and (ii) whether Migdal, Myers and Insley actually committed an unlawful act in furtherance of a conspiracy.
The court does not dispute Migdal, Myers' contention that an attorney does not engage in a conspiracy where he or she acts within the scope of his or her employment. See Fraidin, 93 Md. App. at 234-35. If, as the court has found, a fact finder could find that Migdal, Myers commenced the suit against Sharpel without probable cause and not primarily for the purpose of aiding Insley in obtaining a proper adjudication of his claim, and if all the other elements of malicious use of process and or tortious interference with prospective advantage were satisfied, a fact finder could reasonably infer that Migdal, Myers acted outside the scope of its employment. That is, it appears that Migdal, Myers' liability on the count of conspiracy may be coextensive with its liability on the underlying claims for malicious use of process and tortious interference with prospective advantage.
B. Plaintiffs' Motion
There are genuine issues of fact as to Migdal, Myers' and Insley's liability on the underlying claims for malicious use of process and tortious interference with prospective advantage. These questions, in turn, raise genuine issues of material fact on the first and second elements of the tort of civil conspiracy. Therefore, Plaintiffs' motion for summary judgment on the count of conspiracy will be denied.
For the reasons stated above, Counts II and IV and Plaintiff Sharpel's Count III for malicious use of process remain for resolution.
Therefore, it is, this _______ day of September, 1999, by the United States Bankruptcy Court for the District of Maryland,
DECLARED, that Plaintiffs' Count II for tortious interference with prospective advantage is not barred by limitations; and it is further
ORDERED AND DECLARED, that Plaintiffs' cause of action for abuse of process is dismissed as barred by limitations; and it is further
ORDERED, that Plaintiff David Peltz' Count III for abuse of process and malicious use of process is dismissed for lack of standing; and it is further
ORDERED, that Plaintiffs' motion for summary judgment is denied as to all Defendants on all counts; and it is further
ORDERED, that Defendants' motions for summary judgment on Count II for tortious interference with prospective advantage are denied; and it is further
ORDERED, that Defendants' motions for summary judgment on Count I for tortious interference with contract are granted; and it is further
ORDERED, that Defendants' motions for summary judgment on the count of malicious use of process are granted in the alternative as against Plaintiff Peltz and denied as against Plaintiff Sharpel; and it is further
ORDERED, that Defendants' motions for summary judgment on Count IV for civil conspiracy are denied; and it is further
ORDERED, that Defendant Insley's motion for summary judgment on the issue of whether his alleged debt to Plaintiffs is excepted from discharge pursuant to 11 U.S.C. § 523(a)(6) is denied.