Siliski v. Allstate Insurance Co.

Siliski v. Allstate Insurance Co. (2001-127); 174 Vt. 200; 811 A.2d 148

[Filed 15-Aug-2002]
[Motion for Reargument Denied 05-Sep-2002]

       NOTICE:  This opinion is subject to motions for reargument under
  V.R.A.P. 40 as well as formal revision before publication in the Vermont
  Reports.  Readers are requested to notify the Reporter of Decisions,
  Vermont Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801 of
  any errors in order that corrections may be made before this opinion goes
  to press.


                                No. 2001-127


  Joseph J. and Doreen H. Siliski	         Supreme Court

                                                 On Appeal from
       v.	                                 Rutland Superior Court


  Allstate Insurance Company,	                 January Term, 2002
  James J. Guiel, Peggy Dumont and 
  Michael Gannon

  Richard W. Norton, J.

  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. (FN1) 

       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.,
  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. Tex. 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., 518 N.E.2d 328, 331
  (Ill. App. Ct. 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, 685 N.E.2d 1347, 1352
  (Ill. 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, 722 P.2d 274, 278 (Ariz. 1986); Wong v. Panis, 772 P.2d 695, 699
  (Haw. 1989); Nelson v. Miller, 607 P.2d 438, 446 (Kan. 1980); see also
  Restatement (Second) of Torts § 674, cmt. j (1976) (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, 722 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, 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 dismissal
  is unambiguous.  Defendants explicitly requested dismissal without
  prejudice on the basis of the potential conflict arising from the dual
  representation and to preserve Dumont's ability to reinstate the claim
  should she find substitute counsel.  Cf. Ramsey v. Leath, 706 F.2d 1166,
  1171 (11th Cir. 1983) (voluntary dismissal without prejudice would not be
  considered favorable termination where it was done so that action could be
  refiled in a different forum); Strutz v. McNagny, 558 N.E.2d 1103, 1107
  (Ind. Ct. App. 1990) (dismissal without prejudice to allow for claims to be
  filed in another pending proceeding did not constitute favorable
  termination).  The trial court granted the motion on this basis and
  specifically declined the Siliskis' request that the dismissal be with
  prejudice, noting that no issue had been decided on the merits at the time
  of dismissal.  Cf. Pronger v. O'Dell, 379 N.W.2d 330, 332 n. 2 (Wis. Ct.
  App. 1985) ("a voluntary dismissal that does not adjudicate the merits of
  the claim does not constitute a favorable judicial termination of an action
  sufficient to support a claim for malicious prosecution").  The Siliskis
  made no further effort to contest the nature of the dismissal at that time
  or following trial, nor did they pursue sanctions in the underlying
  proceeding based on the counterclaim they now assert was without merit and
  maliciously interposed.  See V.R.C.P. 11(c) (providing for sanctions). 
  Thus, the record before the trial court in this case regarding the
  circumstances surrounding the dismissal did not reflect on the merits of
  the claim nor did it evince an intent on Dumont's part to wholly abandon
  her claim.  Cf. Wong, 772 P.2d  at 699.  Consequently, the trial court
  properly determined that the voluntary dismissal without prejudice, viewed
  in light of the surrounding 

 

  circumstances, was not a favorable termination for purposes of the
  Siliskis' malicious prosecution claim.

       The Siliskis argue, however, that the asserted basis for dismissal was
  mere pretext to withdraw a claim the defendants knew had no merit.  The
  only evidence they point to, however, of this ulterior motive is an
  affidavit and deposition by their attorney in the former proceeding
  describing an internal memorandum from Dumont's attorney to Allstate that
  fell into his hands in the course of trial, and which has since
  disappeared, assessing the merits of Dumont's counterclaim in an
  unfavorable light.  While evidence of this memo, which is of arguable
  admissibility, may be relevant to whether defendants had probable cause to
  bring the counterclaim and whether they did so with malice, it does not
  change the basis on which the trial court dismissed the claim - a basis
  which had no bearing on the merits.  Furthermore, given the disfavor with
  which malicious prosecution suits are viewed, see Anello v. Vinci, 142 Vt.
  583, 587, 458 A.2d 1117, 1120 (1983); Cult Awareness Network, 685 N.E.2d  at
  1357, speculating about the true grounds for seeking voluntary dismissal
  versus pretextual grounds should not be encouraged where the trial court
  has made a clear record of its reasoning for granting the motion to dismiss
  on the asserted basis and has specifically rejected an argument that a
  dismissal be with prejudice such as the court did in this case.  Thus, the
  affidavit cannot convert the nature of the court's dismissal into a
  favorable termination for the Siliskis.
   
       The Siliskis also argue that, despite the trial court's dismissal
  without prejudice and the circumstances surrounding it, the dismissal
  became a termination in their favor by operation of law when the jury
  determined that Chase was only 40% responsible for the collision (notably,
  the jury determined he was in fact negligent and partially responsible for
  the collision).  This argument is premised on the theory that a future suit
  by Dumont would be disposed of by summary judgment 

 

  based on collateral estoppel (notably not res judicata).  See Berisha, 144
  Vt. at 138-39, 474 A.2d  at 91 (notwithstanding fact that rule allowed
  counterclaim to be asserted in separate, subsequent action, party entitled
  to summary judgment because collaterally estopped from relitigating issue
  of comparative negligence of two parties to accident determined in earlier
  suit).  This hypothetical summary judgment is both logically and factually
  remote from the trial court's dismissal without prejudice that the Siliskis
  rely on as the termination-in-their-favor element of their malicious
  prosecution claim, however.  Cf. Withall, 518 N.E.2d  at 331-32 (voluntary
  dismissal without prejudice in combination with award of Rule 11-type
  sanctions in underlying suit could not be equated with favorable
  termination for purposes of malicious prosecution suit).  Furthermore, even
  if the subsequent determination by the jury that Chase was less negligent
  than Dumont could definitively prevent Dumont from reasserting her
  negligence claim against Chase individually under our hybrid comparative
  negligence scheme because of collateral estoppel, see 12 V.S.A. § 1036, it
  does not prevent her from reasserting her claim against Mr. and Mrs.
  Siliski for negligent supervision.  A jury has never determined the issue
  of their potential negligence.  Lastly, Dumont's claim based on the
  allegations in the Siliskis' suit against her are not disposed of by the
  jury's verdict apportioning responsibility for the collision, regardless of
  whatever merit they may have independent of that.  Therefore, the jury
  verdict is only relevant to one of her several counterclaims against the
  Siliskis, and remotely at that.
   
       Finally, were we to hold that the dismissal for reasons wholly
  unrelated to the merits of the suit, in combination with the argument that
  collateral estoppel would entitle the Siliskis to summary judgment in a
  subsequent suit by Dumont based on a claim of negligence against Chase
  individually, is tantamount to or the equivalent of a favorable
  termination, it would be at least as appropriate to apply collateral
  estoppel in this case at the summary judgment stage on the issue of whether
  Dumont 

 

  had probable cause to bring her counterclaim.  See Cook v. Nelson, 167 Vt.
  505, 511, 712 A.2d 382, 385 (1998) (essential element of tort of malicious
  prosecution is commencement of a suit without probable cause); Condosta v.
  Grussing, 144 Vt. 454, 458, 479 A.2d 149, 151 (1984) (want of probable
  cause is necessary element in cause of action for malicious prosecution). 
  In other words, the Siliskis should be estopped from arguing that Dumont
  had no probable cause to bring her negligence claim by the jury's
  determination that Chase was negligent (albeit less so than Dumont) and his
  negligence was in part the proximate cause of the accident.  Thus, the
  defendants are arguably entitled to summary judgment on that alternate
  basis as well.  See Larkin v. City of Burlington, ___ Vt. ___, ___, 772 A.2d 553, 556 (2001) ("we will not reverse [a] trial court's underlying
  decision if the record before us reveals any legal grounds that would
  justify the result").
   
       Interestingly, the Siliskis point out that defendants' suit is also
  now barred by the statute of limitations, and thus argue it should be
  considered terminated in their favor on that basis.  But this point only
  highlights the danger of relying on a procedural bar that is factually
  remote from the circumstances actually giving rise to a dismissal without
  prejudice to meet the prima facie requirement of termination of the
  underlying suit in a party's favor.  The two should not be equated. 
  Otherwise, a party could always meet this element in a malicious
  prosecution suit any time an underlying suit is not reinstated before the
  statute of limitations tolls, an event that has no relation to the merits
  of the underlying suit or the circumstances surrounding the dismissal
  itself.  A successful claim for malicious prosecution has to require more. 
  See Wong, 772 P.2d  at 699 (voluntary dismissal without prejudice in
  combination with running of statute of limitations did not satisfy
  requirement of favorable termination as statute-of-limitations bar did not
  reflect on merits of claim); see also Palmer Dev. Corp. v. Gordon, 723 A.2d 881, 884 (Me. 1999) (dismissal on statute-

 

  of-limitations grounds does not constitute a favorable termination for
  purposes of malicious prosecution), and cases cited therein. 

       With respect to the trial court's summary judgment on the Siliskis'
  IIED claim, we need not decide whether the act of filing suit is privileged
  such that it may never give rise to a claim for IIED, as we can affirm
  based on the trial court's alternate rationale that the assertion of the
  counterclaim at issue in this case was, as a matter of law, not conduct so
  extreme and outrageous as to exceed the bounds of acceptable conduct.  The
  elements of IIED include extreme and outrageous conduct, done intentionally
  or with reckless disregard of the probability of resulting emotional
  distress to the claimant, that has in fact resulted in extreme emotional
  distress.  Denton v. Chittenden Bank, 163 Vt. 62, 66, 655 A.2d 703, 706
  (1994).  "As a threshold issue, the trial court must determine whether the
  conduct was so extreme and outrageous that a jury could reasonably find
  liability." Id.  Accordingly, the Siliskis must demonstrate to the trial
  court, and this Court on appeal, that defendants' conduct was "so
  outrageous as to surpass all possible bounds of decency, and . . . be
  regarded as atrocious, and utterly intolerable in a civilized community." 
  Gallipo v. City of Rutland, 163 Vt. 83, 94, 656 A.2d 635, 643 (1994)
  (internal quotation marks and citations omitted, alteration in original).

       The Siliskis base their claim for IIED on their allegations that
  defendants filed a counterclaim in the Siliskis' suit without "factual,
  medical or legal basis" and did so for the purpose of "humiliating,
  embarrassing, and intimidating [the Siliskis], and coercing [them] into
  dropping their bona fide claims against Dumont."  These allegations, even
  if true, are simply not enough to make out a claim for IIED. (FN2) 
  Furthermore, defendants' claim was a permissive counterclaim filed in 

 

  response to the Siliskis' claim, as opposed to a claim asserted on
  defendants' own initiative, and the circumstances of the collision giving
  rise to the claims were ambiguous with regard to fault.  Thus, we agree
  with the trial court that filing the counterclaim and its surrounding
  circumstances fail as a matter of law to meet the heavy burden of
  establishing a prima facie case of IIED.  See Denton, 163 Vt. at 66, 655 A.2d  at 706 (standard for establishing outrageous conduct "necessarily a
  high one"); Gallipo, 163 Vt. at 94, 656 A.2d  at 643 (plaintiff's burden on
  claim of IIED "a heavy one"); cf. Schwartz v. Frankenhoff, 169 Vt. 287,
  299, 733 A.2d 74, 83-84 (1999) (acts of sending demand letter for amount
  beyond recipient's means and refusing settlement offer fell "far short" of
  the conduct necessary to give rise to claim for IIED).

       Affirmed.


                                       FOR THE COURT:


                                       _______________________________________
                                       Associate Justice


------------------------------------------------------------------------------
                                  Footnotes

FN1.  The Siliskis have moved to strike defendants' supplemental filing
  following oral argument in this case or in the alternative to consider
  their filing made in response.  We deny the motion to strike and
  consequently have taken the Siliskis' responsive filing under advisement in
  deciding this case. 

FN2.  These allegations more closely resemble the proof necessary to
  establish a violation of V.R.C.P. 11, which would appear to be the more
  appropriate remedy in such circumstances.  See V.R.C.P. 11(b) & (c).  But,
  as noted above, the Siliskis failed to pursue Rule 11 sanctions in the
  previous action before or after trial, despite possessing knowledge of all
  of the facts they now claim give rise to their claim for IIED.