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Attorney Can Be Liable for Malicious Prosecution & Aiding and Abetting

Chalpin v. Snyder, ______ Ariz. Adv.____2008 WL 4659438 (Az. App. Div. 1, Oct. 21, 2008) (Justice Irvine) MALICIOUS PROSECUTION REQUIRES PROOF OF OBJECTIVE AND SUBJECTIVE PROBABLE CAUSE, i.e. PERPETRATOR INITIATOR MUST REASONALBY BELIEVE HE HAS A “GOOD CHANCE” OF ESTABLISHING CASE TO SATISFACTION OF THE COURT OR JURY/AN ATTORNEY CAN BE LIABLE TO A THIRD PARTY FOR AIDING AND ABETTING A CLIENT IN COMMITTING A TORT AGAINST THE THIRD PERSON PURSUANT TO RESTATEMENT.

Hi-Health had a substantial commercial liability policy with Reliance Insurance. Chalpin, President of Hi-Health added his daughter who was going to school in California to the policy. The listed automobile was garaged in California where she attended school and it was in California where she became intoxicated and negligently caused a serious automobile accident which resulted in catastrophic injury.

Initially Reliance said there were no coverage issues with respect to the case and provided a defense. Reliance attended a mediation whereupon it apparently first appreciated the magnitude of the plaintiff’s injuries. Shortly after determining that this was a multi-million case Reliance began looking into the possibility of escaping responsibility for the accident based on the fact that the car was listed as garaged in Arizona when in fact it was garaged in California.

Reliance was advised by a Phoenix law firm that they had no viable coverage defense based upon the doctrine of “reasonable expectations.” A second attorney by the name of Snyder gave the same advice but then suggested a declaratory relief action be filed against the insured in order to put pressure upon the insured and injured plaintiff to settle the case for a lesser amount and to likewise put pressure upon the insured to perhaps contribute towards the resolution of the claim.

Ultimately Reliance settled the tort claim for $8,500,000.00, with the intent of continuing to seek a recovery of some, if not all, of these funds from Hi-Health.

Hi-Health filed a lawsuit seeking a declaration that coverage existed and Reliance responded with a cross-claim crafted by Snyder. Reliance ultimately lost the declaratory relief action and was subject to an award of $468,000.00 in attorneys’ fees and $14,000 in costs which were never paid because Reliance went bankrupt. Thereafter Chalpin and Hi-Health sued Snyder and his firm for malicious prosecution and aiding and abetting.

The issue before the court with respect to malicious prosecution was whether or not the plaintiff could meet the probable cause prong of the test. In order for a malicious prosecution claim to survive a motion to dismiss or motion for summary judgment there must be both subjective and objective proof of probable cause. Here Snyder argued there could be no probable cause because the trial court in the underlying action had denied a motion for summary judgment filed against him on this very issue. He argued that if the court felt there was a question of fact as to whether or not probable cause existed there must be objective probable cause.

The Arizona court of appeals rejected this argument finding that a court can deny a motion for summary judgment without absolutely concluding that there is no question of fact and that even where questions of fact exist, there still may not be objective probable cause.

The standard for proving that an attorney had probable cause for bringing an action and therefore cannot be subject to malicious prosecution is whether the initiator of the action reasonably believes that he has a good chance of establishing his case to the satisfaction of the court or the jury. Here the court found there was evidence to support such a conclusion and therefore summary judgment for the attorney was inappropriate.

With respect to the tort of aiding and abetting, the court further recognized that the Restatement (Third) of the Law Governing Lawyers, section 56 specifically provides that a lawyer can be tortiously liable for aiding and abetting a client in committing a tort against another. Here sufficient facts were plead to establish that it was Snyder’s idea and actions which supported the various tort theories alleged in the Complaint and that the aiding and abetting in bringing this action caused Chalpin’s and Hi-Health’s damage.

If you feel you have been wrongfully sued or mistreated by an attorney and want to pursue a claim, contact us as we may be able to help.

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Attorney Can Be Liable for Malicious Prosecution & Aiding and Abetting