Friedman v. Dozorc

Levin, J.

(concurring). Much of the discussion of the problem of unjustified litigation suffers, from *58 an undue focus upon the need to compensate the injury suffered by the defendant subjected to a groundless and malicious action. Groundless civil litigation is, however, more than an affliction visited upon a few scattered individuals; it besets the judicial system as a whole. It is, therefore, appropriate to think of it as a systemic problem and to fashion a remedy which preserves and strengthens the integrity of the civil litigation system rather than randomly providing a fortuitous amount of compensation in a handful of isolated cases.

In England, the losing party in a civil action is ordinarily required to reimburse the prevailing party for that portion of the latter’s litigation costs which is determined by the judge or an officer of the court to have been "necessary”. 1 The recovery thus obtained is usually incomplete, but greater costs can be awarded if the litigation was vexatious or groundless. 2

The English system has been criticized because the risk of responsibility for a portion of the opponent’s actual costs may deter debatable, good-faith claims. 3

Commentators have also been skeptical of the potential of court-administered sanctions within the original lawsuit as a remedy for groundless litigation because in this country the costs awarded to the prevailing party in a civil action are typically fixed by statute at amounts which pale beside the actual costs incurred in litigation, and American courts have generally been inclined to leave revision of costs schemes to the legislatures. 4

*59 I am of the opinion, however, that this Court can appropriately devise an approach to wrongful litigation which is capable of providing both an appropriate measure of deterrence and reasonable compensation for wronged litigants without imperiling the right of free access to the courts. The remedy, quite simply, is to recognize the inadequacy of existing provisions for the taxation of costs and to adopt a new and distinct court rule authorizing the judge to whom a civil action is assigned to order payment of the prevailing party’s actual expenses, including reasonable attorneys’ fees and limited consequential damages, where the action was wrongfully initiated, defended or continued. 5 Depending upon the circumstances, payment might be required of the attorney, the client or both. The factual questions implicit in such an evaluation of the losing side’s conduct would be resolved by the judge after a prompt post-termination hearing at which the parties could call witnesses and they and their attorneys could testify.

The foundation for developing such a comprehensive structure for controlling vexatious litigation is already in place. GCR 1963, 111.6, provides:

*60 "Unwarranted Allegations and Denials. If it appears at the trial that any fact alleged or denied by a pleading ought not to have been so alleged or denied and such fact if alleged is not proved or if denied, is proved or admitted, the court may, if the allegation or denial is unreasonable, require the party making such allegation or denial to pay to the adverse party the reasonable expenses incurred in proving or preparing to prove or disprove such fact as the case may be, including reasonable attorney fees.”

The principles of GCR 1963, 111.6, can readily be extended to wrongful litigation and defense as well as wrongful pleading and can be made applicable regardless of the stage at which the prior litigation terminates; the award of fees and expenses should be limited to those incurred after the point at which the action should have been discontinued or liability admitted.

The sum recoverable should include all fees and administrative charges incurred because of the litigation as well as reasonable attorney’s fees. The judge could award a prevailing defendant in a professional malpractice case an additional sum for loss of income-producing time and injury to professional reputation or business resulting from the wrongful action if the amount is capable of being calculated with reasonable certainty. 6

*61 The rule could provide that the standard to be applied by the judge in determining whether such an award should be made is whether the losing party or his attorney had proceeded without probable cause and for an improper purpose. 7 So defining the inquiry, in terms of the traditional elements of a cause of action for malicious prosecution of civil proceedings, allows the judge to consult existing precedent for guidance.

Having such a determination made by the judge to whom the original proceeding was assigned would have a number of advantages over assessment of these questions by judge and jury in a separate tort action:

First, a strategy for evaluating the propriety of litigation which is administered exclusively by *62 judges is more susceptible of consistent application and careful supervision than a strategy which relies on a group of laymen chosen at random, often for one day and one trial. Confiding the question solely to the judge avoids the bifurcation of function associated with jury trial on the critical issue of probable cause in an action for malicious prosecution of civil proceedings. 8 Limiting recovery to actual pecuniary loss, thereby eliminating recovery for emotional distress, and relying on a judge to assess damages, combined with the greater control that appellate courts exercise over a judge’s findings as compared to a jury’s verdict, should tend to avoid awards which might intimidate good-faith litigants.

Second, the judge would usually be familiar with the history of the case; the necessary evidence could be adduced and the relevant findings made in far more efficient fashion than if a new action and a separate trial before a different judge were required.

Third, parties who might be reluctant to initiate further litigation although they felt themselves wronged would be more likely to avail themselves of internal sanctions than of the opportunity to start a separate action which would take its place on the crowded docket and which the defendants would be likely to resist with all available means.

Groundless litigation diverts judicial resources which could otherwise be devoted to more deserving cases and represents a challenge to this Court’s “general superintending control over all *63 courts” 9 comprising Michigan’s "one court of justice”. 10 By adopting a court rule this Court would address the problem directly and in a manner compatible with its responsibility to exercise close control and supervision.

This is unmistakably a test case, brought primarily to secure a change in the law. If a court rule responsive to the problem of wrongful litigation is ultimately adopted, the plaintiff and others who have rallied to his cause may win the war even if they have lost this battle.

In pursuing this case, the plaintiff and his supporters have taken a leading role in directing our attention to a widely held concern that today the courts are burdened and innocent parties harassed by an epidemic of frivolous lawsuits. The measure proposed here will put the validity of that perception to the test. All those who feel that they have been made the victims of wrongful litigation would be able to seek a prompt remedy without facing the difficulties and delay inherent in a subsequent tort action.

The effectiveness of such a rule would depend upon the vigilance of the judges who would apply it. The opinion of the Court in the instant case describes certain instances in which sanctions should not be imposed against an attorney. Nothing in the opinion of the Court should, however, be understood as indicating that the Court is unwilling to commit itself to the imposition of sanctions against an attorney where it is appropriate.

Williams, J., concurred with Levin, J.

Goodhart, Costs, 38 Yale L J 849, 854-862 (1929).

Id., 861-862.

Ackerman v Kaufman, 41 Ariz 110, 114; 15 P2d 966 (1932). But see Goodhart, supra, pp 874-876.

Note, Groundless Litigation and the Malicious Prosecution Debate: *59 A Historical Analysis, 88 Yale L J 1218, 1232-1233 (1979). See, also, McCormick, Damages, ch 8, pp 234-259.

Adoption of such a rule appears to be an appropriate exercise of this Court’s plenary power over practice and procedure in Michigan courts. See Perin v Peuler (On Rehearing), 373 Mich 531, 540-541 ; 130 NW2d 4 (1964).

Section 2401 of the Revised Judicature Act provides:

"Except as otherwise provided by statute, the supreme court shall by rule regulate the taxation of costs.” MCL 600.2401; MSA 27A.2401. But GCR 1963, 16, states:

"Rules of practice set forth in any statute, not in conflict with any of these rules, shall be deemed to be in effect until superseded by rules adopted by the Supreme Court.”

Any conflict between a statute and implementation by court rule of the proposal set forth in this opinion can thus be resolved in favor of the rule. Such conflict is unlikely in any event because the instant proposal does not concern costs, but expenses above and beyond costs.

The proposed procedure would not appear to violate a constitutional right of jury trial. US Const, Am VII, preserving the right of jury trial in common-law suits where the amount in controversy exceeds twenty dollars, does not apply to the states through the Fourteenth Amendment. Melancon v McKeithen, 345 F Supp 1025 (ED La, 1972), aff'd per curiam sub nom Mayes v Ellis, 409 US 943 ; 93 S Ct 289 ; 34 L Ed 2d 214 (1972).

Const 1963, art 1, § 14, preserves the right of jury trial only in causes of action which were part of the common law prior to its adoption. See Conservation Dep’t v Brown, 335 Mich 343, 346 ; 55 NW2d 859 (1952).

The procedure suggested here would not involve a cause of action in the usual sense of that term, and certainly not one predating the Michigan Constitution. See, generally, Curtis v Loether, 415 US 189, *61 194-195 ; 94 S Ct 1005 ; 39 L Ed 2d 260 (1974); Atlas Roofing Co v Occupational Safety & Health Review Comm, 430 US 442 ; 97 S Ct 1261 ; 51 L Ed 2d 464 (1977).

The rule could incorporate the basic concepts of an action for wrongful civil proceedings — absence of probable cause and malice (improper purpose) — as expressed in the Restatement Torts, 2d, §§ 674, 675, 676, 681 and 681A, but differ in the following respects;

(i) an award could be made to a plaintiff as well as to a defendant who prevails in the underlying cause where the requisite elements (absence of probable cause and malice in maintaining or defending the cause and damages) are established;

(ii) an award could be restricted to damages for specific pecuniary loss, including actual attorney fees and other expense reasonably incurred in maintaining or defending the proceedings and any harm to professional or business reputation; recovery for defamation not affecting professional or business reputation or for emotional distress need not be provided for;

(iii) the judge who presided in the underlying cause claimed to have been wrongfully brought or defended could decide the matter without a jury following a hearing which would be required to be concluded within a specified time which parallels the time for a motion for a new trial or judgment notwithstanding the verdict; a motion seeking such an award could be required to be filed by the prevailing party within a limited time after entry of judgment in the underlying cause; hearing on probable cause, malice and damages could be required to be concluded promptly after filing of the motion; findings of fact and conclusions of law could'be required to be filed by the judge soon thereafter; any appeal could be consolidated with an appeal on the merits of the underlying cause.

3 Restatement Torts, 2d, § 681B, pp 472-473, provides that the court determines whether "the defendant had probable cause for his action” but the jury determines "the circumstances under which the proceedings were initiated in so far as may be necessary to enable the court to determine whether the defendant had probable cause for initiating them”.

Const 1963, art 6, § 4.

Const 1963, art 6, § 1.